Hmmmm,

As for the drive utilisation I would say that you are OK up to 80%, once you hit 90% you can expect serious performance issues, and that goes for both NTFS and FAT32.

Not only will you have problems with defragmentation, you will have problems with any decent sized database and your page file could be restricted. Basically, Windows maintenance tasks do require a reasonable amount of working space.

IIRC the issue with Linux was writing to an NTFS partition, not reading it. I would have thought that was a thing of the past with the latest distros, but I could be wrong.

I have normally associated FAT32 with supporting legacy applications running under 98/ME on a box that booted one of those and an NT based OS. In the past it was also used for Linux, where you wanted it and Linux to be able to write to the same partition.

I have an updated service pack of Windows
If that is XP SP2, I seem to recall that brings you up to automatic 48bit addressing support. So it sounds possible that your current version cannot understand a drive bigger than 137GB (128Gb in binary). That would give us 15 + 1 + 137 + the "missing" 7 = 160Gb?

To support 48 bit addressing, your BIOS and your OS need to support it.