FAT32 does not support "sparse" attribute, which is necessary for Acronis Nonstop Backup
This article applies to:
Acronis True Image Home 2010
Acronis True Image Home 2011
Acronis True Image Home 2012
Acronis Nonstop Backup storage can only be put on a partition with NTFS file system.
Other file systems (e.g. FAT32) are not supported.
This limitation is due to the fact that Acronis Nonstop Backup needs the sparse file attribute to function (e.g. to perform autoconsolidation). The sparse file attribute was introduced in NTFS. See also Microsoft TechNet Article: NTFS File System (Sparse File Support).
Some external USB drives have FAT32 file system by default.