Seems odd that it would cut off right at 32GB as if limited by the disk format.
Did you reformat the disk in FAT32 using the included utility in XP? That might have something to do with it. DiskUtility is limited to creating FAT32 partitions of 32GB or less, despite the ability of XP to read and write to FAT32 partitions larger than that. Try formatting the disk as NTFS.
But I don't really know anything regarding the matter, so I might have overlooked something. If it works, great! If not, well I know nothing! :P