Copying folder of files to external drive only makes aliases (OSX 10.5.8)

I'm copying of folders, subfolders and files with picture and video files from a machine (Dual G4) with OSX 10.5.8. They need to be accessible to a windows machine so I've formatted an external hard drive with FAT 32.

When I drag the folder in question to the external drive I would expect it to copy the folder with folders with subfolders and files intact. However, what I get is the top level folder with the files immediately in that folder copied correctly but the sub-folders are only aliases. When I drag the folder to the external drive it goes through the motions of copying (shows a copy dialogue, takes several minutes to copy the 10Gb of data).

The files are all under 100mb and no folder with contents is over 1Gb. If I drag and drop the individual files from the subfolder, they copy fine.

Any ideas? Is there an osx behaviour setting that I'm missing?