Both mac os and windows can understand FAT32 file system.
However, do format the iPod using the iPod updater (windows version). You can download it from apple.com.
Simply formatting iPod under windowsXP will result your iPod cannot be recoginzed by iTune. In this case, your iPod will be just a remoevable HDD.
iPod updater will install firmwares into your iPod so that it can be recogized by iTune. Firmware is just similar to BIOS.
BTW, FAT32 is not the native file system for Mac OS X. So do not expect excellent performance for Mac if your iPod is in FAT32. For example, when copying mass mp3 through iTunes, say, larger than 10G, if the iPod is in FAT32, iTunes will probably report error. But in most case, FAT32 works well under Mac OS X.
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