Server performance is not affected by the file system used (FAT or NTFS). Your choice of file system should be determined by factors other than performance.
If you do not need to dual-boot Windows NT with MS-DOS or Windows 95/98, NTFS is recommended.
Warning Microsoft SQL Server™ data and transaction log files must not be placed on compressed file systems.
For more information about choosing the appropriate file system, see your operating system documentation.
Note When running on Windows NT, SQL Server performance can be improved further if the databases are created on disks formatted using NTFS and, specifically, 64-KB extent sizes. For more information about formatting an NTFS disk, see your Windows NT documentation.