The E200 hardware was developed well before the SDHC standard. With original firmware, the largest card the E200 could take is a 4GB card. With Rockbox I think 16GB has been used. It's not suprising that a 32GB card would be rejected.
However, if I were to try such a card, it would be a Sandisk card. Sansa's have been known to have issues with some third party cards. I've seen issues reported on Kingston and Transcend cards.