I have a Samsung SSD 960 EVO NVMe M.2 250GB installed and have 2 questions.
-Is it possible to add an extra 2.5" HDD?
-Is it better to add an external HDD instead of internal? I am thinking of extra heat being generated by an additonal internal drive.
It is not only possible, it is advisable. There is no reason to use an external drive. NUC7i7BNH has drive bay designed to install SATA 2.5 " SSD or SATA 2.5" HDD. On this list you will find all drives validated by Intel for your NUC (although drives not included on this list probably will work too). This is Integration Guide for your NUC . This is an instruction video.
The primary fan temperature sensor is measuring temperature on CPU (which is installed on the upper board site) , so I don't expect the temperature to rise. Keep the thermal solution and the air inlets clean from dust and you should not have temperature problem. I've never saw reports in this forum, reporting high temperature problems caused by internal HDD. I've NUC6i5SYH, NUC7i7DNHE and NUC8i7INH with an internal HDD, working just fine.