Yes it will since 'OS9 clean install' option only installs a 'clean' copy of 9 without deleting anything. Your old OS9 system folder will then be renamed 'previous system folder.' It is advisable to keep your old system folder for a while but delete the finder and system files inside of it since your old system could re-activate (or bless) itself.
Answer to question 2: As long as the drive was formated as HFS+ and is in good working order, the installation of OSX won't erase anything. It's always a good idea to back up your work when installing OSX however because it does make changes to your Hard drives stucture.