Many file attributes sure get stripped in FAT, that is one of the reasons for setting up loop devices. I have had 3 with Knoppix 6.2.1, the ordinary persistent store plus two more, 4GB each. The underlying file can reside on any supported fs. (Including, it seems, NTFS). The main reason I have for creating Unix fs partitions wherever I can, is not speed, but practicality. But if you run Knoppix from a Unix partition on an external USB HD, I think you might also notice some speed improvements over USB sticks whenever writing is involved. And the 4GB limit on persistent store seems to be solely dictated byt FAT32. I I'm using 8 and 16 GB now as alternatives, 8GB seems to be a good balance.
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