XP Installation

Have WinME with a c: drive and a logical drive d: -a restore feature. Purchased a second hard drive and set it up into 2 partitions-both FAT32. I planned on using the 1st part of the new hard drive, now d:, as a backup for my c: drive which is just about maxed out.
The second part of the new drive now F:,I was
wanting to install WIN XP. Am having problems with installation.Does the XP need a NTFS to install to or does the second drive need a primary partition. Any help would be appreciated. Have copied a number of files from c: to d: with no problems. Thanks-