Hi,
from the syslinux page http://syslinux.zytor.com/faq.php#bugs:
SYSLINUX will not work (and will refuse to install) on filesystems
with a cluster size of more than 16K (typically means a filesystem
of more than 1 GB.)
This doesn't seem to apply anymore, at least I used version 3
successfully on a 2 GB FAT16 filesystem with 32K clusters.
--
Regards,
Feri.