Pamela Dingle has posted some information we need to get out more broadly:
Important installation note for people wanting to play with CardSpace: CardSpace only works when installed on an NTFS filesystem. If you are planning on setting up the July CTP and playing with CardSpace, make sure your C: drive is not FAT32. (more…)
We can't get the same kind of access control protection with FAT as we can with NTFS – for example the ability to set permissions at the directory and file level – so we set the bar at NTFS.