First of all if the case has a 3.5" HDD mount then it will fit just fine. However I would not reccomend using the same drive for storage and for booting, at the very least partition it. What will happen after a while is that the drive will get fragmented and boot time will go up and up and up.
As far as vertical mounting the this is not proven but the theory is that mounting the drives vertical will reduce the chances of damage because since the drive heads are horizontal in the drive mounting horizontal will cause any road bump to "push" the heads towards the platters causing a harddrive crash and probable data loss. When mounting vertical it is thought that since most of what a car gets in terms of road bumps goes up and down there is less chance that the head will crash.