Old and slow it may be, but you could make good recordings with a 001, many have and still do.
Monitors? You'll get loads of suggestions! Get active monitors at a price you can afford (only you know how much). Maybe check out eBay for Alesis M1 Active. Run them off the monitor ouput of the 001.
Installing the PCI card you can do yourself, all you need is a Philips screwdriver. And yes, make sure you're grounded to discharge any static. After installing any new hardware I'd reset nvram, which is like zapping the PRAM but more thorough in that it rebuilds the device tree. To reset nvram, restart the Mac and hold down the 4 keys Alt-Command-o-f until the Open Firmware command line screen appears. At the prompt type the following commands {(return) just means hit the return key!}:
reset-nvram (return)
set-defaults (return)
reset-all (return)
The Mac will now restart.
Increasing the speed of the processor will enable you to use more tracks and plugins. Whether you need that or not depends on what you want to do. I suggest that you go with what you've got first and then see if and/or how you're limited by CPU speed. If you do need more grunt,
here's a place to start.
You didn't mention which versions of Mac OS and PTLE you're using.
2x20GB drives will serve, but I suspect that they're getting a bit long in the tooth! Any drive 4 years old ought to be retired to backup duties. Whether or not you choose to replace them, it's essential that you have some kind of backup strategy. Drives do fail, and invariably at the least opportune moment!
Also, I presume that you have these 2 drives in a Master/Slave configuration on the internal ATA bus? In this configuration the 2 drives are sharing a single bus, and only one drive at a time can be accessed to read or write. For best performance you should have the OS and PTLE on one drive on one bus, and your session and audio files on another drive on another bus.
The internal ATA bus on your Mac is limited to drives 128GB or less (137GB decimal). You could use one of your 20GB drives on this bus for your boot drive with OS and Applications. Get a
SeriTek/1S2 SATA PCI host card and a SATA hard drive like the
250GB Barracuda and use it for your session/audio files (no drive size limit on the PCI bus). The second 20GB drive on the ATA bus could be used for backups of your session/audio files. Further on down the road you could use a second SATA drive on the SeriTek host as your boot drive and relegate both ATA drives to backup duties.
Hope this helps.