Formating removable hard drive for FATS32

[#1]

Quote from: paulo

May be but still no sign of FATS32 as an option!!

That's FAT, not FATS Paulo. 
Have a look at this document http://support.microsoft.com/?kbid=955704 .  Under certain unusual circumstances Windows XP will not let you format a drive larger than 32 GB with FAT32.  But the author of the document seems to feel, wrongly, that this is universal.  So perhaps the author of the update you installed thought this also and blocked the FAT32 format option for drives larger than 32 GB?  If I were you I would try uninstalling the update that gives you the Ex FAT option.

[#2]

The 32GB limit on FAT32 is during Windows install/setup only.  
(earlier version of Windows, up to and including 2000 had 32GB as a universal limit)
Sounds like maybe something else (e.g. ExFAT or a corruption/bug) is blocking it. Or maybe a BIOS limitation.
Either way it sounds like Disk Management, which certainly "should" work, isn't an option for you at present.  
Or just use this tool: http://www.extend-partition.com/resource/convert-ntfs-to-fat32-partition.html

[#3]

Quote from: HPsauce

The 32GB limit on FAT32 is during Windows install/setup only.

Yes, exactly, but you wouldn't know that reading the link I posted, which makes me think it is the Ex Fat "update/add-on" that is doing the blocking.  I bet if Paulo tried to create a 31 GB partition and then format it with FAT32 he would find that option is now available.