Can I add a monitor with refresh rate above 60 Hz?

Yes, assuming you buy the correct adapter for your iMac. You do not state which iMac you have so that is a wild card, iMacs have been in production for over 20 years in a wide variety of configurations. 21.5" iMac were in production from late 2009 to 2020.

Sorry but what you want to do will not work. The refurbished iMac will come pre-installed with either Big Sur or Monterey. Target Display Mode is dead technology now and would never work with a 2018 iMac and also not work with Mac Big Sur or Monterey.

Before you ask, no there are no work arounds. You can verify everything I mentioned by carefully looking over Target Display Mode (Target Display Mode).

If you need an external display you should buy one, these are far easier to setup, are less expensive than Target Display Mode because they don't require expensive cabling and are dead reliable.

You can however try a third party solution like Luna Display however I'd would go with an external display as I can't tell you how well Luna display even works.