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Photoshop should automatically detect available disks, and then you will have the option to select which disk to use as the scratch disk. I am not aware of a button to “add” a disk, as this should be done automatically. Make sure that your disk is properly connected.
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What kind of hardware are you talking about?
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The scratch disk is not a Photoshop setting. It is actual, physical disk space. You need to purchase a new/bigger drive, or clear out space in your old.
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As others have mentioned, you need another physical drive attached to your computer. Do you have one attached?
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And the kind of drive may also make a difference (see »Supported drive formats for scratch disks«):
https://helpx.adobe.com/photoshop/using/scratch-disks-preferences.html