Can my MacBook 1,1 be upgraded to anything higher than Snow Leopard? and can the machine be updated in its specs? Hardware Overview:

Model Name: MacBook
Model Identifier: MacBook 1,1
Processor Name: Intel Core Duo
Processor Speed: 2 GHz
Number of Processors: 1
Total Number of Cores: 2
L2 Cache (per processor): 2 MB
Memory: 1 GB
Bus Speed: 667 MHz
Boot ROM Version: MB11.0061.B03
No, your MacBook model cannot be upgraded to a version later than Mac OS X 10.6.8 because of restrictions imposed by Apple. 

It is highly likely that even if you could install a later version, your system would run unstable and/or slow.

Regarding upgrading your hardware, yes, it's possible, but I'd say you'll have a hard time finding parts (other than RAM, which is pretty easy to find and replace) since production for this model was discontinued in November 2006.

Also, note that even if you do upgrade your hardware it will not enable you to install a later version than 10.6.8. Your computer will still be recognized as a MacBook 1,1.