Why can't I format a partition larger than 32GB using FAT32 in Windows 2000/XP?

There are a couple work arounds for this issue.

Solution 1:
Format the partition using the NTFS file system. Microsoft officially
recommends using the NTFS file system on all drives and partitions
larger than 32GB. However, by doing this, you will not be able to
access the partition in a dual-boot situation, as Windows 95/98/ME
do not recognize NTFS as a valid format type.

Solution 2:
Create multiple partitions on the drive, with the sizes of these
partitions being less than 32GB per partition. When doing this,
remember that each partition created will be assigned a separate
drive letter, possibly affecting the current drive letter assignments
of existing partitions.