Yes, this is confusing...the boot disk XP can generate is UNABLE to access a NTFS partition if you choose NTFS at install time (or if you converted your partition later).
NTFS is a file system designed for security (advanced sharing capabilities and protection, drive mirroring...) and capacity (theoretical capacity of a NTFS partition is 2**64 bytes). It has extended file attributes and builtin data compression.
But NTFS partitions are only used with Win NT, Win 2000 and Win XP; other OS (MS-DOS, 95, 98 and ME) are not even able to recognize such a partition. This is the reason why a DOS boot diskette (such as the one XP itself can produce!) is unable to see and to handle a NTFS partition.
Linney suggests using NTFSDOS: I see no other way of accessing such a partition from DOS.
The features NTFS offers are required for corporate/networked users; I do not see clearly what advantage a home user with only one machine can have in using it (possibly "confidential" attribute for the "My Documents" folder if user switching is used).
To convert a FAT32 partition to NTFS, you only need to type "CONVERT C: TO NTFS" in a DOS window.
The reverse conversion, NTFS to FAT32, requires a tool like Powerquest Partition Magic. Be aware that only the version 7 of this program can handle NTFS partitions created by XP...and that all "extended file attributes" of NTFS, if used, are lost in this operation.