Hey
With reference to your questions;
1) It's basically a toss-up between space and speed. Usually, with FAT32, the drive allocates a substantial amount of space to what's commonly known as 'slack', to allow for reasonable operating speeds.
The same principle applies to NTFS. The choice is merely based on the allocation size for each byte of data on the hard drive.
The lower the allocation size, the more space you have, but accessing the data on the drive will be slow and vice versa.
The default unit allocation size is a good balance between space and speed, so my advice would be to stick with 4096 bytes.
Fear not, you will gain space by reformating from FAT32 to NTFS and you can always change back again if need be.
2) The above applies to hard drives of all sizes, both internal and external and is not dependant on the software you recieve on the drive or choose to install at a later stage.