I installed a new HD in my A600 yesterday. It has Kickstart 37.350. I was able to get any HD to work up to 4000MB but any partition over that size would get an error when formatting. I installed a IBM 4.86GB HD and simply partitioned it upto 4000MB and left the rest untouched. I used a strip of electrical tape to hold the drive on the bracket. Works a treat.
I did verify that even older 1.2GB drives did not have the same holes as the original 60/80MB Conner drives, so you are either going to have to drill holes or secure it with something else. I prefer electrical tape as it will hold it for a long time with little risk of it breaking or snapping off.