NTFS or exFAT on Flash Drive
exFAT is an upgrade to the old FAT file system type adding support for large files over 4GB in size. It became available in Windows Vista and up. It was not available in Windows XP. File size limit of 16 EiB (Limited by volume size), raised from close to 4 GiB in FAT32. Support for access control lists.
Rather than the old 32-bit addressing the exFAT file system uses 64-bit addressing. It is said that exFAT does not have as much of the operational overhead of NTFS as it lacks many features that add complexity.
The exFAT system is a closed standard that Microsoft has not released for public development. NTFS on flash memory has been known to be inefficient for quite some time. exFAT’s smaller footprint/overhead makes it ideal for this purpose. Of course, only if your definition of “ideal” allows software to be proprietary and not open source.
NTFS - New Technology File System is the default file system for drives that run modern versions of Microsoft Windows.
For USB drives, you should use exFAT if you’re in a Windows and Mac environment, and NTFS if you’re only using Windows.
Windows XP
To format a USB flash drive NTFS on Windows XP: Windows XP does have the ability to format drives with the NTFS file system, but normally the option is disabled. To enable it, open up Device Manager and find your USB drive, go to the Properties -> Policies tab and then choose "Optimize for performance". This not only enables NTFS on a flash drive but it enables write caching which means you will need to use the Safely Remove Hardware dialog to avoid losing data. Once you format the drive as NTFS you can switch the write caching back off.
To enable exFAT on Windows XP 32-bit: Download Update for Windows XP (KB955704) WindowsXP-KB955704-x86-ENU.exe and install on Windows XP. Microsoft has removed the link to the update. Try this link.