If I am running software that is very system and disk intensive such as Microsoft Flight Simulator X which is almost constantly reading large amounts of data from the disk when one is in flight then which file system is better to use, Fat32 or NTFS?
The problem I have seen with SSD is that you have to customize your OS so that it doesn't wear out the drive. Plus, you have to format the SSD drive in such a way given by manufacture's website. SSD Tweaker download and reviews from SnapFiles
Windows 7 supports SSD, you shouldn't have to do anything. It is definitely faster than regular HD drives, but is way more expensive and they do give out eventually with no way to recover the data.
i would go SATA With a WD Black Cavair or a WD Velociraptor on a SATA-II 3GB connection. i use FSX and FS2k4 aswell and i have no lagging at all from loading/unloading scenery
You didn't say how much RAM you have, Windows 32 bit will address up to 4 GB of RAM (including Video Ram). My solution:
Upgrade RAM to 4 GB, get better Video Card (with 1 GB Ram) update to latest video drivers, run OS from first 7200 RPM drive and install FS on another 7200 RPM drive. Shift swap file from c: to second drive. ps. SSD or 10000 RPM drive will help but the price tag is just too high.
There is many options to take, depends on your budget