I'm not gidge, but I am trying to catch up with gidge.
1) I've seen 40GB 7200RPM Maxtors for $20 less than that. With shipping maybe $90. Check pricewatch.com. Note: it is nicer to buy a drive locally because you can exchange it if it's dead out of the box. Other than that case, it doesn't matter because your warranty will be with Maxtor, regardless of where you get the drive. (Maxtor's warranty and exchange program is fantastic)
2) Don't worry about compatibility too much, but you might search deja.com with your HP model number and "maxtor" to see if there are any problems. *Sometimes* there are problems with specific drives on specific controllers. I have had trouble with IBM drives on highpoint controllers, and trouble with a maxtor on a promise controller (fixable). It happens occasionally.
3) Open the computer and look. You need one open 3.5" drive. It's best if it's in an open location. If you have to stack your hard drives on top of eachother, then I would recommend something like "The Ultimate Hard Drive cooler" which is a pretty cool device. For one thing, it'll move the drive to a 5.25" bay, plus it has a big heatsink and fan on it to keep the drive cool. Kinda neat. Maybe noisy though. If you don't have any open 3.5" bays and you don't want something as fancy as a HD cooler, you can always just pick up a little 3.5" to 5.25" kit for a couple bucks and mount the drive in an open 5.25" bay (the type your CDROM drive is in, for example). Hell, I can give you one for free if you can't find one.
4) This either means you have a 3.5" or 5.25" bay free, and it's in front of an "opening" on the case. For instance, your CDROM is in an "External 5.25" Bay". Now these bays can be "covered" with little inserts that come with the case. Look at the front of your case, you will either see a 5.25" or a 3.5" bay with a little insert in it (e.g. no CDROM drive or Floppy drive, just a piece of plastic). See #3 for more info.
5) If you're just adding a drive, it should be reasonably painless. Just be careful. Always make sure that some part of your bare skin is touching a metal portion of the case when working inside. UNPLUG the computer. Some people will tell you to leave it plugged in so that there's proper grounding, but you only need to worry about the difference in potential between you and the computer. Unplug it or risk electric shock or serious damage. If possible, connect the IDE cable to the drive and motherboard before seating the drive to make life easier. Pin 1 on the cable is marked with a red stripe, and will always go TOWARDS the power cable on the drive (this does not apply to floppies). Pin 1 on the motherboard will be marked....or you can just look at the stripes on the existing cable(s).
Try to put the audio drive on IDE2 Master. Where you then put the CDROM drive sort of depends on how you use your system. Typically, though, you'll put the CDROM as slave to the secondary (audio) HD. Disable Auto Insert Notification!
It's basically very simple, everything in that machine of yours just plugs together all nice & neat. There aren't many real tricks, and you don't have to be an electronics whiz. Just be careful. Adding a hard drive is probably one of the easiest internal upgrades you can do.
6) If you weren't maxing then you'll never know. Typically a 5400RPM drive that does 12MB/sec sustained transfer is technically capable of 41 24/96 tracks. A 7200RPM drive that does 25MB/sec sustained transfer is capable of 86 24/96 tracks. You'll probably never reach either limit with that system. You will notice a performance increase just in everyday audio tasks though. Peak files will be created faster, mixdown can be faster, destructive edits will happen faster. Don't expect to run any more effects. Overall just a better feel. It's nice to have Windows on a 7200RPM drive as well...but no biggie.
*DAMN, I had to take a phone call during this post...so I'm sure gidge beat me to it!*
Slackmaster 2000