Check the cables are all connected properly and tightly. Worst case, a 4 gig 2.5" IDE drive will cost you around 10 bucks on ebay. If you have a different cable, try to change it. Ive had drive problems caused by damaged SCSI or IDE cables before. My guess is a loose or reversed connection though.
As for getting on the net, a $25-30 3c589 ethernet (3c589 is a chipset by 3Com, found in various cheap PCMCIA net cards by 3Com and others) is sufficient. Then download a TCP stack off AmiNet (there are a few to choose from). I got mine on the net pretty easy, though I dont use it for much except installing AmiNet programs.
