It would not be hard to fit the OS and software in 20MB provided you don't use Windows. A DOS based (MXPLAY), Linux based (Cajun) or BeOS based player with the OS could easily fit, then you could use the hard drive for music only and have instant boot-up. Pretty cool the way the whole thing is integrated too - you wouldn't need to have anyhting installed in the trunk, provided you could find a spot big enugh to mount this bad boy.
I think the only real issue would be the fact that it only supports 486 and the AMD 586 processors, not pentiums. I'm not sure how well the AMD 5X86 would handle MP3 decoding...my guess is not very well.