The problem is that melian is saying the files are disappearing from the directory after there are so many files in there. It isn't supposed to happen and isn't a limitation of the filesystem.
The files on your hd are just data associated with a name in the FAT (File Allocation Table) and directories are just a way of organizing those files and are stored away from the file names.
NTFS doesn't use a FAT it uses a Master File Table :shrug: