Paul,

I can say there is a possibility to read 500 kbps stream by AVR microcontroller with 16 MHz clock. OK, that is a little bit tricky but you can read and store one sector (512 bytes). Don't ask me about interliving

You can use small AVR MC to read MFM stream and standard 8052 to manage data or what you want to do.

This "project" is very interesting to check somebody potential as software developer.

Another way is using the shift register to receive the MFM-bit stream together with 8052. The 62,5 kbytes per second rate is more acceptable for 8052 derivatives.

Regards,
George