If you're going NTFS make sure you don't encrypt the file system, makes it impossible to recover if you reinstall the OS (the encryption algorith goes by a timestamp generated during OS install). I'd definatly go with NTFS w/ Win2K. For some reason it can't defrag FAT32 too well, does fine with FAT16 though.
NTFS file partitions can be seen via network shares because viewing them is not dependent upon file format. Regardless if you're running FAT16, FAT32, NTFS, you can access and browse filesystems. I even have UNIX filesystems mapped as network drives on my NT4 system.
Win2K can see NTFS, FAT32, and FAT16 local partitions. NT4 can only see NTFS and FAT16. Win9x can see FAT16 and FAT32. Windows 3.1 restricted to FAT16. Not sure about the older ones. Again this is for local partitions, not network shares.
Furthermore NTFS, FAT32, and FAT16 only refer to discs, not CD's. CD's are formatted differently, which is why you can put a CD in a Mac, PC, or UNIX box and still read it. Hopes this clears things up.