Yes it is possible. There have been a few threads about it here, but I don't see them and the search isn't working right now for some reason.
The things you have to worry about are:
- Heat
- room to put it
- turbulence, (hard drives don't like bumps)
- theft, if you don't mount it in the dash or center console
Some suggestions are
laptop hard drives, because they can take more bumps and are smaller.
VIA Cyrix processors because they put out VERY little heat, and are powerful enough to play mp3's and basic software. (no divx movies though).