If you use the Media Creation Tool to create the flash drive directly, it will format the first 32 GB of that flash drive as FAT32. Here's the deal with that.

1. The FAT32 partition does not need to be 32 GB in size. It only needs to be 4 GB in size. So you have two options. Use the MCT to save the ISO file, and manually set up the FAT32 partition yourself on the flash drive, then copy the files and folders from the mounted ISO file to the USB flash drive OR shrink the FAT32 partition after letting the MCT set it up.

2. After you have the FAT32 partition set up the way you want it on the USB flash drive, you're going to have the rest of the flash drive as unallocated space. More recent versions of Windows 10 will recognize multiple partitions on flash drives. So to use the rest of the flash drive for whatever you want to, all you have to do is create partition(s), format them, and assign them drive letters.