I found this bug when using the WAIK's WinPE 2.0 to set up a new Vista32 Home Basic system.  The "Convert" command within WinPE is supposed to convert the file system from FAT32 to NTFS, when used with the appropriate syntax, but although it appears to do this, it actually did nothing.

I first booted a BING CDR and, without installing this to the hard drive, used it to create a 32G FAT32 primary partition that was aligned for NTFS conversion. 

Vista is not supposed to be installed on FAT32, and Vista's NTFS may differ from what BING would create, so the next step was to convert BING's FAT32 primary to Vista's NTFS.  I booted a WinPE 2.0 CDR as built by the WAIK, and used the Convert command, which appeared to work.  Then I used ImageX to apply my reference build of Vista32 Home Basic RTM.

All of which worked fine, except that when booted, the file system Vista was running on, was reported as FAT32.  I also noticed some things did not work, such as System Restore.

A Bart CDR boot reported the file system as FAT32, and a DiskEdit peek at the partition boot record confirmed this.

In my opinion, there are two bugs here; that Convert silently failed to convert the file system, and that Vista failed to detect that it was booting off FAT32.  That ImageX applied a Vista .WIM to a FAT32 volume, I don't see as a bug, as not all .WIM will necessarily be Vista.  I would not expect ImageX to be aware of what was inside the .WIM it was harvesting or applying.

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