Why are you trying to format such a large drive to FAT32 anyway? PM can convert NTFS to FAT32, but it's 5 years old. I hope you are aware of the 4GB file size limit. If your external has 4+GB files, that may prevent conversion to FAT32.

XP will only allow creation of a 32GB FAT32 partition. Anything larger would require a third party partitioner. However, most will require a reformat rather than do a conversion. If formatting is ok, you can try Easeus or Paragon. Partition app links are in the Best of Data Storage link in my signature.