Hi,
Your best way to upgrade an A500 I believe is to just get a cheap A590 or similar off eBay or Amibay or somewhere like that. I don't know the IDE68K intimately but I understand you need to make a little board to fit in the side if you want to boot from it.
Once you get an A590 or whatever (GVP make good ones too) you can always change the HDD. I don't know what the limit is, but it'll be less than 4GB, and to be honest on an A500 you're going to be pushing 400MB let alone 4GB - ideally get a nice little GVP HDD and a 1GB 50-pin SCSI drive and you're away.
Or if you're feeling really flush get a GVP A530.
