The CD first does the partitioning, then applies the image, then boots it. You can format it in NTFS in between but if you reapply the FAT32 ghost image, it will be FAT32 at the end anyway. But you say you will only use the i386 files and not the ghosting, so normally your new nLite cd will let you format the way you want, no ? (like a normal XP install). Also you can still convert FAT to NTFS after the install, it takes few minutes. Not very elegant but ...