Its vfat. Change that firstly.
Secondly, by mounting maually do you have to type mount /dev/sda4 yadayada?
Are you in X?
If so, when you change the ext3 to vfat in /etc/fstab then create a link to the drive on ur desktop. that easy.
Also, are you loading the ppa module?
also, change auto back to noauto. maybe even add this line umask=000 to that section as well to allow all users, not just root, to mount it.
I have the same drive and thats how mine is setup.
Zip was probably the easiest thing to setup on my system!
There is a guide over at Iomega if you haven't seen it already.