One thing to note though...

If you install XP and choose to install it using on an NTFS partition, several directories will get proper permissions (most notably the windows directory). If you install XP on a FAT/FAT32 partition and convert it afterwards everyone will have read/write permissions everywhere.

Edit: Well, not quite, but close enough...
When you install Windows 2000 to an NTFS file system partition, part of the set up process is to apply default security settings to the system files and folders located on the boot partition.

If you initially installed Windows 2000 to a FAT or FAT32 partition, and then later used the Convert.exe utility to convert the partition to NTFS, default security settings are not applied. To apply default Security settings after a convert you can use the below steps to apply "setup security.inf" to the system. However, in Windows 2000 Microsoft does not support setting security on already installed files to match NTFS security after a convert from FAT(32). To get a file permission that matches the security settings of a NTFS install, the system must be formatted and reinstalled selecting NTFS as the file system during the text portion of the Windows 2000 install. If a clean install is not possible, you can perform an in-place upgrade of the system after the files system has been converted to NTFS. The upgrade will address the file permission of all operating system components, however any program that had custom security will not have the correct permissions set. If you want, you can create a user defined .inf file that contains custom security settings for additional files and folders and apply them the same way.
Source: The Default NTFS Permissions Are Not Applied to a Converted Boot Partition