There is a bug with Snow Leopard, 10.6.0-10.6.2, where you will get an error stating that “The operation can’t be completed” if you attempt to copy a folder from one volume formatted as FAT32 to another volume formatted as FAT32.  This only occurs with folders containing files, and doesn’t occur with individual files.  The workaround is to use an intermediate volume that isn’t formatted as FAT32.