It's because the windows format command has an artificial restriction built into it that won't allow volumes over 32GB to be formatted in FAT32.
http://download.cnet....-2248_4-10070864.html
The above will allow you to format a larger drive in FAT32, but you are still going to have the problem that FAT32 not supporting individual files larger than 4GB, if you need to get rid of this restricition then you'll need to format the drive in EXT3, which becomes a little more complicated as EXT3 isn't a format that windows will recognise at all without extra drivers.