Format drives larger than 32GB using FAT32 in Windows

Microsoft states
"You cannot format a volume larger than 32 gigabytes (GB) in size using the FAT32 file system during the Windows XP installation process. Windows XP can mount and support FAT32 volumes larger than 32 GB (subject to the other limits), but you cannot create a FAT32 volume larger than 32 GB by using the Format tool during Setup. If you need to format a volume that is larger than 32 GB, use the NTFS file system to format it. Another option is to start from a Microsoft Windows 98 or Microsoft Windows Millennium Edition (Me) Startup disk and use the Format tool included on the disk.

NOTE: When you attempt to format a FAT32 partition that is larger than 32 GB during the Windows XP installation process, the format operation fails near the end of the process, and you may receive the following error message:
Logical Disk Manager: Volume size too big."

Ref: http://support.microsoft.com/kb/314463

To format a drive/volume larger than 32GB use the following tools

1. fat32format

Steps:
1. Download it HERE
2. Extract the fat32format.exe file to somewhere suitable
3. Open command/DOS prompt and navugate to where you extracted fat32format.exe
4. Use the command "fat32format X:" (where "X" is the drive label of the drive)

2. Linux mkdosfs for Windows NT/2K/XP

Steps:
1. Download it HERE
2. Exctract the downloaded mkdosfs.zip to somewhere
3. Open command/DOS prompt and navigate to "mkdosfs" folder
4. Use the command "mkdosfs -v -F 32 X:"(where "X" is the drive label of the drive)

3. Fat32Formatter

Steps:
1. Download it HERE
2. Exctract the downloaded Fat32FormatterEN.zip to somewhere
3. Run the exe

4. H2Format

Steps:
1. Download it HERE
2. Exctract the downloaded h2format.zip to somewhere
3. Run the exe

NB: You can also convert a FAT16 volume or a FAT32 volume to an NTFS file system in Windows XP retaining all your data.
Read HERE