For some reason, the option to format a drive with the FAT32 filesystem was removed from the GUI format tool in Windows 7. Thankfully you can still do it from the command line format utility. This guide will step you through the process of formatting a drive using the FAT32 filesystem using the command line.
Format a drive with FAT32 in Windows 7
First you will need to open up the command prompt.
To format the drive, use the following command:
format e: /fs:fat32 /q
Replace e: with the drive letter of the drive you want to format.
C:\>format e: /fs:fat32 /q Insert new disk for drive E: and press ENTER when ready... The type of the file system is FAT32. QuickFormatting 961M Initializing the File Allocation Table (FAT)... Volume label (11 characters, ENTER for none)? Format complete. 957.0 MB total disk space. 957.0 MB are available. 4,096 bytes in each allocation unit. 244,991 allocation units available on disk. 32 bits in each FAT entry. Volume Serial Number is 52D1-FCA7 C:\>