I seemed to have missed your original post

Anyway, as for what type of partition you should have is your choice.
Here is a
link that compares NTFS against FAT32.
As far as I know, if you install two versions of XP on one drive, they will 'see' each other, so if you want to have two versions of XP, you really need another drive. I will research this info a little but feel fairly sure its right.
AND THIS IS WHAT I FOUND:
The safest and most convenient way of doing what you want is to invest in two hard disk caddies from
www.rlsupplies.co.uk. For around £16 plus postage you’ll be able to fit the caddy’s housing in a spare 5.25-inch drive bay and place your two hard drives in separate caddies. Make sure both are set to Master and that your BIOS is set to auto-detect your drive channels, and you switch OSes simply by powering down your machine and then switching the drive caddies – all without having to open your PC.