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More info? How large is the install? What are you installing to???
Well first question, why do you have to use FAT32? FAT32 is old, and you've run into one of the limitations that makes it undesirable on modern systems. There's other file system formats, why not use one that's better suited for larger file sizes?
No one uses FAT32 anymore. Its either NTFS or exFAT on things like SD cards.
Valve is working on a version of SteamOS 3 that runs on any PC, but it's not ready. For now if you're looking for some kind of SteamOS to use on an ordinary PC (IE: Not a Steam Deck.), try something like Bazzite[bazzite.gg], which is very good and can provide a SteamOS like experience.