For maximum compatibility, FAT32 from Mac OS X or exFAT from Windows. Drives formatted as NTFS can be read on the Mac but not written to.
If you're going to be using it as a network share, NTFS if it'll be connected to a PC or Mac OS Extended (Journaled) if it'll be connected to a Mac or AirPort base station.
Drive Partition and Format
1. pen Disk Utility in your Utilities folder.
2. After DU loads select your hard drive (this is the entry with the mfgr.'s ID and size) from the left side list. Click on the Partition tab in the DU main window.
3. Under the Volume Scheme heading set the number of partitions from the drop down menu to one. Click on the Options button, set the partition scheme to GUID then click on the OK button. Set the format type to MSDOS. Click on the Partition button and wait until the process has completed.