FAT32 v. NTFS

Which filesystem allows more speed and helps free more space? Better yet, which one is all-around better?

 

NTFS is by far the better FS. Reliability compared to FAT is superior.

 

How do I convert from FAT32 to NTFS with xp?

 

start.. run.. type
CMD hit enter..
at the prompt type

CONVERT C: /FS:NTFS
hit enter .. read the prompts.. reboot.

 

Does it preserve all data, because it says it'll remove an operating system backup (wtf?)

 

It means what it says. It will not keep a Windows 9x backup that you upgraded over, because there is no point.

Unless you see problems, data is otherwise preserved.

Read: Backup your stuff if you are worried.

Coming from my previous job, I've seen successful conversions, and ones that went bad, and data was lost.

 

As addition to what Adryn said, that is why you should make sure PRIOR to conversion that your system is clean from virus, spyware. Get rid of absolute and temp files/folder, run ScanDisk checking for HD read/write errors as well as fixing broken/cross-linked entries. Afterwards run defragmentation process.
Then disable and memory control and anti-virus scanning utilities that you have running and configured to run at boot, etc...