The image will wipe the fat32 out and install the image as it is.
BUT, then going back into PM you can convert the NTFS to Fat32. I have done that several times, but it took a while for that to be done. A long while if I remember right.
Also, I only had about 300MB open on the hdd so that may have added to the time factor.

Now from here which also have a video on how to do that

To convert a partition's file system:

1. In the partition list, select the partition you want to convert.

2. In the Partition Operations pane, click "Convert Partition."

3. Select the file system type you would like to convert the partition to.

4. Click "OK."

5. Read the message about languages and characters being changed, and then click "OK."

6. Since this operation can not be batched, click "Yes" to apply the changes at once.