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Initially, I was reluctant to try DriveSpace 3, because of the many shortcomings in the old DoubleSpace system that DOS 6.
Nuts & Bolts' utilities are fully 32-bit for Windows 95/97 and support FAT 32 and DriveSpace and DriveSpace 3.
Windows 95 has such a program, called DriveSpace, that is built into its operating system and it's very easy to set up.