It's difficult to believe that an Apple Store employee was unable to confirm that the Classic has a hard drive. But, as Niel has already said....
As for your question about gapless music, I'm less surprised that they were unable to answer that one.
I have an observation about the Classic's ability with gapless music. My Classic, (admittedly, an older one from 2007, running 1.1.2 PC of the software) tends to break the music bretween tracks the first time it's played, but from then on, will play tracks without that gap.
The current Classic runs a different version of the software, so one would hope that Apple has removed that glitch from it.
I suggest that if you know anyone with a recent Classic, that you ask them for their experience. If necessary, load a gapless album onto their iPod and test it for yourself.