When an attempt is made to update (not copy) a user profile stored on a FAT32 partition, a new copy of the profile is created in documents and settings, named "profileuser.netbiosnameofdomain". This is despite the option to copy profile is not set.
Part of the profile update process is to update NTFS permissions so that both the local user and the domain user are able to have physical access to the profile folder. Setting folder security is not possible on a FAT32 partition.
The profile folders should be contained on a partition that is NTFS formatted. Updating of profiles on a FAT32 partition is not supported. This is one of the requirements of a successful profile update when using Quest NDS Migrator.