The handle is invalid

iMac
4 Gb RAM
Windows XP Pro SP3 running under Parallels

I have a FAT32 external HD on the virtual side of an iMAC
This drive is accessible from both the Mac and Windows side.
All was well until two days ago when one single folder failed to open,
producing an error message:
[path] is not accessible. The handle is invalid.

The folder continued to open without hesitation on the Mac side. I
copied the folder to an off-drive location, deleted the original and
recopied the folder back to its original location. Same problem. Then,
from the Windows side, I renamed the folder by putting a space between
each letter of the folder's name. The problem was resolved and it now
opens as before the problem arose.

For future reference, what happened here?

Thank you.