tut tut red!
As for PSU I would sell your M1 and go with a carnetix P1900 thingy.
Hard drive - don't see why not.
audio...checked the apple site and they had this:
It has optical but it may only be pass-through for AC3 and not output other but I doubt it. My soundblaster does AC3 pass-through and outputs normal PC sounds to my surround sound reciever by the coax digital (i dont use analogue).