It's not only the partition size that is limited. The FAT code in TOS also has other restrictions. For example, it only supports FAT file systems with exactly 2 clusters per (logical) sector. You can find the limitations summarized here: http://joo.kie.sk/wp-content/uploads/20 ... _Guide.pdf
, section "9.3.2Big Partition (BGM) Limits". These limits are lifted by BigDOS, but your C: partition must adhere to them. You'll need a program such as mkfs.msdos (which allows you to specify number of clusters, logical sector size, etc.) to create such a file system on a PC.