You cannot format a volume larger than 32 GB in size using the FAT32 file system in Win2K/XP. The Win2K/XP FastFAT driver can mount and support volumes larger than 32 GB that use the FAT32 file system (subject to the other limits), but you cannot create one using the Format tool. This behaviour is by design. Microsoft recommends using NTFS for partitions greater than 32GB.
If you need to format a FAT32 partition greater than 32GB, you will need to do it under Windows 98/SE/ME.