Once in a while, everyone runs into those little gotchas.  I had mine today.  I had just downloaded the Orcas Beta 2 bits vhd which is approximately 11gb.  I extracted out the vhd to my hard drive with no problem.  Then I had a brilliant idea.  I have plenty of space on my external drive, let me move it there.  I kept getting a wonderful error about diskspace requirements. Hmmm. 




After checking to ensure I had plenty of space on the drive, I tried it again, with the same result.  Then it hit me.  I checked to see how the hard drive was formatted just out of curiosity and saw that it was FAT32.  I did a quick search on hard drive size with FAT32 and came up with some notes that the maximum file size for a FAT32 drive is 4gb.  Go figure. 

So I have just moved everything off of my external and have reformatted it to NTFS.  No problems, and it gave me a reason to clean my external drive up.