Is there a fixed limit on the number of files or folders that an NTFS or FAT directory may contain? Is there a practical limit on the number of files or folders from a performance standpoint?
There is no specific limit to the number of files on an NTFS volume. However, you will not be able to create any new files when your volume is so full that Windows NT cannot allocate another entry in the MFT (Master File Table).
The FAT system has a 512 file/directory limit for the root directory.
Both systems degrade with large numbers of files in a single directory. However, the FAT systems degrade much more rapidly and at a lower number of files. There are many settings in NT that will affect the degradation, including allowing use of long file names, etc.
So, since your mileage may vary, the only reasonable way to determine the practical limits are to test on your particular system. My personal rules of thumb are fewer than 200 files/directory in a FAT volume, fewer than 2,000 files/directory in a NTFS volume. These rules were based on some testing I did ages ago on an NT 3.50 system. Using the DIR command is a quick and dirty way to determine relative speeds. Look for not only the time it takes to scroll, but the speed of scrolling.