I ran into an issue today where attempting to create a file on my SD card would work fine until it got to 170 files. Then I would get the error Exception System.IO.IOException - CLR_E_FILE_IO (1). I found out that is the limit for the number of files in a FAT16 folder after some amount of heartache and grief and figured I’d post it here in case anyone else runs into it. I reformatted as FAT32 and Fez seems to be ok with that so far.
That is a limitation of fat16 and this is only on the root. You only need to add a folder and then all will work like fat32