Geeky bits
All FAT FAT32 and NTFS (there are several ver) are microsoft file systems... the main difference being :- Max file size and max partion size (many other differences eg encryption capabilities ease of data recovery after disaster etc)
The speed is dependent on the buss (USB in this case)
As you probably already know usb fat32 devices are plug and play on windows 7 (yes it will work/be compatible)
The last windows os to use fat32 was win98se (can install xp on fat32 - not the default option)
If the usb device (hard disk) is not faulty, win 7 will pick it up (no drivers needed) and you will have read & write cababilities
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