To save more hard disk space, use compress option on the Drive Properties. For example, you want to compress Local Disk C,
Simply right-click on the Local Disk C icon, and select Properties, on the General tab, at the bottom of it, you can see the Check/Uncheck Box, so check(tick) the box that says "Compress drive to save disk space".

After that click apply, then one dialog will pop-uped and apply it to the folder(s),subfolder(s) and file(s).
It may takes some times to apply it when your drive full of files or barely fat-up ;-) . But it will gives you a satisfaction when you see your drive became more spacious and ready to be fed with more files.

For the ease of reference (the steps):
My Computer -> (Right-click) — Properties -> Check the “Compress drive to save disk space” option -> (Click) Apply button -> Apply the changes to this folder, subfolders and files -> (Click) Ok button.

P/S: I apply this method with my Windows XP SP2 with NTFS partition. Not sure about the FAT(32) file system, but, you can give a try with it and maybe give me your feedback.