Yes you can use both of them, the new one should be set as slave and attached to the same cable as the old drive.
Regarding the file system: This depends on your Windows version. 95/98/ME can only use FAT/FAT32. Windows 2000/XP can use either FAT or NTFS and it does not matter if one drive is FAT and the other NTFS. However any 9X O/S will not be able to read a NTFS formated drive.
If you can, use NTFS - it is a much better file system. It is more reliable, offers compression, security, quotas, etc. This doesn't mean much to most users just as long as they do know it is better, and that it is.
Regarding the file system: This depends on your Windows version. 95/98/ME can only use FAT/FAT32. Windows 2000/XP can use either FAT or NTFS and it does not matter if one drive is FAT and the other NTFS. However any 9X O/S will not be able to read a NTFS formated drive.
If you can, use NTFS - it is a much better file system. It is more reliable, offers compression, security, quotas, etc. This doesn't mean much to most users just as long as they do know it is better, and that it is.