Booted the netbook into Lubuntu and the wireless client mode works just fine. No problem getting to the internet.
Experimented a bit with it. I was able to connect to the internet wired but had to turn off client mode and plug into the WAN port. DD-WRT has a setting to turn the WAN port into a standart port when in client mode. So you could have 4 ethernet ports. The RasPi will have port #4. If the RasPi were turned off you would still have 4+1 as a simple router. I placed a connector in the port to block it when in use by the internal CAT5E.
Looking at 1.8" HDD options. Probably 120GB or 160GB micro SATA. They get rediculous in price after that.
With a RasPi inside you have some other connection options for peripherals, like this.
You should be able to connect to this easily as a network drive. It also has an FTP of its own. Also has a USB printer port. That will save a USB from RasPi. It will not work as a boot drive but that is not needed in a Raspi. The one downside is it can not be used as a swap file either if you need one. If you just need disk storage for say a camera it should work fine.
I will have to look at bootloader option for this setup. I would like to be able to run it as a web server and as a standalone web device like a web camera. It would also be nice to use it as a standalone programming tool or portable desktop.
looking at where to mount the external USB port. 1 USB will be taken up by the HDD. I will probably use a wireless keyboard/mouse combo as I have a couple of them sitting around. When used as a web camera/web server I will use RDP.