Hi KEFMAN
Just popped a 16GB FAT32 USB stick onto my new BDP-S5200, closely followed by a 250GB NTFS USB hard drive, and played an .avi from both. No trouble at all. I don't know if it would fare differently with a 1TB drive - I don't have one to try - but certainly FAT32 and NTFS are not an issue.
FAT 32 and NTFS don't even appear in the downloadable full manual for this player, let alone the flimsy in the box, but I guess Sony hope we will take both for granted.
I am loving the new 'Mirror Mode' on this player, which I expect to supplant the BDP-S5100 in What Hi*Fi's ratings very soon, and have cast several videos from my Nexus 7 without even having to copy them to a USB stick or a hard drive. But I'm finding the Nexus needs to be placed really close to the Sony to work properly.
However, there's a lot of wifi flying around here, including a Sony home cinema amp with S-AIR and a pair of Digisenders, neither of which talk to my router before grabbing a channel for their own use, so I guess the Nexus/Sony link is competing with these. Unless it's going via the router, which I don't think it is, as then having the two work better when close together would be weird....
M_V