I am planning finally switching to XP (after seven years with win2k lol!) as soon as sp3 is available for download.

I have a legit OEM Home license and CD, can I install this, not as an upgrade, but still keep some files on the FAT32 drive? Or will it insist on formatting the partition/creating a new partition?

You won't have to format, but make sure you don't get confused with old and new folders (Windows, Program Files, Documents and settings), some of which will be overwritten by default. It might be better (cleaner, faster) to make a backup of your files and start from scratch (format).

You may even be able to do an upgrade install, not sure with OEM. In which case you get to keep all your programs as well.

Although personally I still would backup your data at least (just in case something goes wrong).

I think its preferable to backup everything you want to keep and do a format and clean install.

I'd make a nLited disc from within your 2K environment first if I was you, that way you can slip stream SP3 on and remove a few things and make it unattended if you want. You can even preinstall some programs through the use of addons. Check out nLite here.

yeah as long as you dont have stuff in folders the install will write to you should be OK (docs and set, windows, program files, etc)

but i HIGHLY recommend backing up and reformatting to NTFS unless you absolutly must have a fat32 partition