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Win 95 setup error

I recently built a computer from parts. It is replacing an old computer which had win 3.1. I copied the \windows files from the old computer to the new.  I tried to use an upgrade disk to upgrade to win95.  When installing, the 95 upgrade I get an error.  The error code is SU-0013 and the text says 'Setup could not create files on your startup drive and cannot setup windows'
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You are trying to install 95 release 950 or 950a onto a FAT32 formatted hard drive, this is not possible:-
PSS ID Number: Q166466
Article last modified on 08-05-1998

The information in this article applies to:
 - Microsoft Windows 95
 - Microsoft Windows 95 OEM Service Release versions 1, 2, 2.1
If you run Setup for the retail (non-OSR2) version of Windows 95 and try
to install Windows 95 in a folder containing an OEM Service Release
version of Windows 95, you may receive the following error message:
   Windows Setup
   Setup found a compressed volume or a disk-cache utility on your
   computer. Quit setup and check your compressed volume with your disk-
   compression software or remove the disk-cache utility. Then run Setup
This error message can also occur if you start your computer using a
Microsoft Windows 98 Startup disk, enable CD-ROM support, and then attempt
to install Windows 95.
If you continue trying to install Windows 95 on a hard disk using the
FAT32 file system, you may receive error message "SU-0013."
If you are installing Windows 95 on a hard disk using the FAT16 file
system, Setup continues but experiences numerous file version conflicts
that generate the following message:
   A file being copied is older than the file currently on your computer.
   It is recommended that you keep your existing file.
If you click Yes to keep the newer files, Setup finishes, but when you
restart the computer you may experience any of the following symptoms:
 - The computer stops responding (hangs) at the logo screen.
 - You receive the error message "Fatal Exception 0D has occurred at
Starting Windows 95 in Safe mode may generate the following error message:
   Fatal Exception 0D has occurred at 0117:00007E1F.
The version of Windows 95 being installed is not the same version that is
already installed.
To verify the version you are installing, type "ver" at a command prompt.
Version 4.00.950 (files dated 7-11-95)is retail and OEM (non-OSR2).
Version 4.00.1111 (files dated 8-24-96) indicates Windows 95 OEM Service
Release 2 (OSR2).
Do not install the retail or OEM (non-OSR2) version of Windows 95 into an
existing Windows 95 OSR2 folder. If you are installing to a hard disk
using the FAT16 file system, install to a different folder. Do not install
the retail or OEM (non-OSR2) version of Windows 95 on a hard disk using
the FAT32 file system.
When you attempt to install the retail version of Windows 95 from the
Windows 95 CD-ROM on a computer with OSR2 installed with the Auto Insert
Notification option enabled, the Add/Remove Software option on the Autorun
menu is disabled. You receive the following warning:
   This CD-ROM is from an older version of Windows than the one you are
   presently using. Setup functionality from this disk will be disabled.
A warning does not appear if:
 - You are installing from a CD-ROM but the Auto Insert Notification
   option is disabled.
 - You browse the Windows 95 CD-ROM and you double-click Setup.exe.
 - You run Setup from the Run dialog box.
You should reinstall OSR2 using the OSR2 CD-ROM provided by your OEM. If
an OSR2 CD-ROM was not provided to you by your OEM, the OSR2 files may
have been provided in a flat folder on your hard disk. To locate this
folder, type the following command at a command prompt:
   dir *.cab /s
To reinstall OSR2, run Setup.exe from the folder containing the OSR2
cabinet (.cab) files.
Contact your OEM for assistance if:
 - You do not have an OSR2 CD-ROM and you cannot locate a folder with the
   cabinet files.
 - You cannot locate the Setup.exe file in the folder that contains the
   cabinet files.
Additional query words: 95
Keywords          : kberrmsg kbsetup osr1 osr2 win95
Version           : 95
Platform          : WINDOWS
Copyright Microsoft Corporation 1998.
mrsquidsAuthor Commented:
What should I do, reformat the disk to FAT16? Then copy the files from the old drive over to the new one and finally upgrade?
I think Partiton Magic can convert from fat32 to fat16, but I'm not sure.

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