Windows XP uses two different names for each and every file on your system. One is the name that you see in explorer and in the command prompt, and the other is an MSDOS compatible 8.3 (8 character title followed by a '.' Then three more characters to indicate the type of file) name. If you are intending to run DOS only software, or connect to pre-Windows 95 computers, you will need this second set of names. If not, you are simply wasting resources.

To disable the 8.3 naming convention:

Open REGEDIT
Navigate to HKEY_LOCAL_MACHINE\System\CurrentControlSet\Control\FileSystem
Change the value of the NtfsDisable8dot3NameCreation key to '1'

Note that some popular programs, including Norton Antivirus, use the 8.3 naming convention.