A couple of things:

That the file manager doesn't show all files have nothing to do with Linux being hard, it's a file manager application issue only. It's presumably written by Nokia, I haven't seen this file manager elsewhere. The issue is a real enough problem, the heading is misleading.

The above is a bit confusing. Are you talking about Memory, as in RAM, virtual memory (as in enough memory for a big application), or are you talking about storage space (as in enough room to install many applications).

For case 1: Swap space _can_ be enabled on the memory cards - that is how it works. Even though the N800 control panel application will only let you do that on the internal card (the system itself can use it wherever it's put).
For case 2: The main reason applications can't be installed into memory cards is that memory cards come default formatted as FAT filesystems, and FAT filesystems don't have proper access bits support - which means that you have to choose between every file being "executable" or no files being "executable". Blame Microsoft for this one.