If I need a FAT partition on the HDD. Do I need to format all of the partitions FAT, then convert the rest to NTSF?
Well I may have answered my own question on my virtual machine. XP only formats the C\: drive during installtion. This is great. An XP PRO SP2 disc with all the hotfixes and no Messenger, Outlook, etc. All in 430MB. Plenty of room for more stuff.
No, but if you need a FAT partition (the only reason I can think of is for a dual boot), it will need to be the first partition in order to boot DOS/9x/ME.