Actually, IIRC you choose the file system after you pick or create the partition you want to install to, just prior to installation , it asks you something about changing the file system, or leaving it intact, or something to that effect, anyway I've always had the option of either file system, and I use NTFS only and use only my ATA100 drives for my OS, even before ATA100 was even supported my drives simply were recognised as ATA66 drives and NTFS was the file system I used.
I don't think I'd trust Tech TV for troubleshooting advice hehe.
Win98 runs on fat16 as well, the "buggyness" of Win9x is related mostly to the old kernel and predominately memory handling, both much improved with the NT kernel that Win2k and now XP are built on. NTFS adds security and data features, but I don't think OS stability is really a function of the actual file system per say.