I wouldn't use fat32 and you're not so that's a good start.
Either way though, the file system you use wouldn't make a difference on the procedure for format and fresh install.
If you are not worried about the data on the other partitions, then I would wipe the whole thing, and only create one partition for the time being. (leaving unused/unpartitioned space on the hard drive.)
You don't need a tool, all you need is your win2k cd. It's a boot cd. Just simpley restart the mahcine with the cd in the cd-rom. Press 'any' key to start win2k boot. If it doesn't want to load from the cd on a start up, then make sure you check the order of your boot sequence in the bios.
At this point it is pretty straightforward. Follow the directions in the setup process, you have the options to install over previous win2k, or wipe the whole drive and create new partitions. Once you have installed win2k, right click my computer, click manage then click disk management. You can create partitions from the unsued portions of your hard drive there. You can also upgrade your hard drive partitions from basic to dynamic! Much better options using dynamic.
good luck!