Most likely, it is defective or fake.
There used to be many fake USB sticks, .e.g 2GB marked or formatted as 8GB 
or something.

Won't be surprised if the same happens to microsd card too..

Android 2.3 support FAT32 and FAT32 can support like capacity in the TB 
range or higher.
Wikipedia should have the details.

Cheers
Eric

On Friday, 30 November 2012 03:59:53 UTC+11, rserling wrote:
>
> Pardon me if this is not the best group for this topic; if not please 
> redirect me. 
> I've received a suspiciously inexpensive 32G micro-SD card and my HTC G2 
> cannot read it. It can be read from a windows (7) PC, and i formatted it as 
> FAT32. An attempt to format it as NTFS failed with no result other than 
> "Format failed." So, 4 questions:
> 1. Is this a defective card? (yes would obviate the other questions)
> 2. Are there cards which by design can only be formatted as FAT32?
> 3. Does the G2/Android 2.3.4 support FAT32? 
> 4. Does the G2/Android 2.3.4 have a SD card size limitation?
>
>

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