Windows Easy Transfer may not transfer file and program settings to a volume formatted with FAT32
When you click Transfer while using Windows Easy Transfer to transfer user files from one computer to a Computer running Windows Vista, you may receive the following error message:
Problem with the selected media. Please try different media, or drive, or select another way to create the transfer disk (FAT32)
For more information on this issue, including potential causes, workarounds, and resolutions, see: Microsoft KB Article KB960865.