XPS M170 HD Upgrade Questions

Community,

I've got a 3 - 4 year old Dell XPS M170 laptop with a 60 gig HD (Hitachi ATA-6). I recently contacted dell to see what type of HD I could upgrade to as I'm looking to put Windows 7 on it and put in a larger HD.

So here are my questions:
1) One person at Dell said I could get a 250Gig or 320 GIG HD and it would work and provided me with a WD 320GB WD3200BEVE-00A0HT0 unit, then another said that I would be limited to 120 GB HD from a hardware standpoint and the 320 GB unit would not work. I've done some searching on the MOBO and I believe I have a ATA-6 HD interface. (I went with the 320 GIG HD because if all else fails I could probably upgrade my PS3 with that and get one if I'm truly size limited or return it under the 21 day return policy)
- Can anyone here confirm or deny the 120 GB limit and explain why? My OS does not arrive till next Mon- Tues (Today = Friday)

2) I've read that ATA-6 is Paralell ATA and is backards compatible with ATA-5, 4 ... and IDE / EIDE.
-Is this true?

3) Based on this what is the largest drive I could upgrade to and what interface would I need to select?

4) As with current systems offered by Dell and my XPSM170 when I ordered it I could go with single HD or RAID. I chose a HS 7200 RPM 60 gig HD thinking I could upgrade to raid later.... hmmm.
-Apparently there is only one HD bay... which begs my next question: Can someone confirm that if I had ordered it in RAID configuration with 2 HD's the laptop case would have had room for 2 HD and now I'm stuck with a 1HD maximum?

Thanks in advance for answers to any of these questions.