If it can run DOS 3.20, or depending on WHICH MS-DOS 2.11 is available, then the 360K drives can be trivially swapped out for 720K.
Your picture shows "generic" MS-DOS 5.00
So, you absolutely can connect 720K drives. (a 1.4M drive will prob'ly be seen as being 720K)
It definitely can handle a hard drive. (trivial GOOGLE shows that a 20M drive was available, but ANY XT drive and controller should prob'ly be usable. Your parallel port hard drive should be fine, once you make a SPARE system disk with enough extraneous stuff deleted off of it.
TRY to find a copy of ZENITH (NOT ANY OTHER BRAND!!) MS-DOS ("Z-DOS") 2.11 or 3.31 If you want to be able to switch between the internal monitor and an external one, you will need MODE.COM from one of THOSE two versions. (and you will need to stetp on the INT21h function call 30h in MODE.COM, OR MS-DOS 5.00 will need to run SETVER to keep from getting a "Wrong DOS version" error message)
If you are crazy enough to want to, you should be able to run Windows 3.00 on it, but NOT 3.10 or above. Windows, of course, will require more disk space than you currently have.
