I have an external hard drive, and I heard somewhere that such a drive can be reset from FAT 123 (or whatever it is) to NTS. Does any of this make sense? Thanks.

Yes.

On a PC, you can re-format it with the disk management tool.

winXP:
It's under administrative tools --> computer management --> disk management. (sorry I forgot where administrative tools is... it might be under control panel.)

Advantages of FAT (in the context of external drives for editing):
read/write on macs; NTFS is read only on Macs

Advantages of NTFS:
no 2GB/4GB file size limit I hour of DV is ~13GB, 2GB of DV is about 9:26 (that figure is not exact)

Thanks; I tried to "convert" formats but I was asked to identify the "volume label" of the drive I want to convert. What's this volume label?

Are you using Windows XP to re-format the drive? (via disk management)

If not, what method/program are you using to re-format it?

2- If you don't know already, re-formatting a drive will erase the data off it.

That's what I'm wary of. I have XP. I'm actually getting a third external drive, so I guess I'll reformat that one from the start.

NTFS is much better disk format, better at data recovery, file size advantages, better security. You should always format your disks that way if you buy new ones. But formatting does erase any info already on it.