Best file system for an external hard drive sharing between OS X and Windows
Solution 1:
Which versions of OS X and Windows do you need it to work with? If they're recent enough, ExFAT is probably the best answer. Support for it was added to OS X sometime around 10.6.5 and AIUI it's built into Windows 7 and available via updates for everything since Windows XP.
BTW, if you're formatting via the Partitions tab in OS X's Disk Utility, be sure to use Options button to select the MBR partition scheme. If you use the Erase tab, just select the disk (not the volume listed under it) and it should automatically use MBR partitioning.
Solution 2:
In my opinion, NTFS is better than FAT for larger drives.
I've had great success with NTFS-3g and NTFS partitions on more than 10 different external drives that I use rather frequently for a large amount of data. NTFS-3g adds NTFS write support to MacOS. I've been using it since the beginning with no data problems--and I write (and delete) a lot of data for work on external drives from Mac OS and Win.
I only use FAT FS for thumb drives.