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I don't know the Windows Tools available to resize the partition, but:

You can boot a Fedora Live system (from DVD or USB) and use the onboard-tool called Disks (gnome-disk) to shrink the existing FAT partition and create a new partition with a Linux file system.

I don't know the Windows Tools available to resize the partition, but:

You can boot a Fedora Live system (from DVD or USB) and use the onboard-tool called Disks (gnome-disk) to shrink the existing FAT partition and create a new partition with a Linux file system.

And, in general, yes, you can format an external drive just as any internal drive - that is not defined by the interface used to connect the drive to your PC's motherboard.