stchman,
First of all congratulations on your Yugo purchase! A lot of guys give them a hard time for not being chrome-lined, but many more will attest to the accuracy of a Yugo-SKS. Do a quick search, many are surprised by it's accuracy.
On the AK conversion:
First off the SKS itself cannot hold AK magazines, not do to the system itself, but due to the fact that an AK magazine is actually wider than the receiver of a traditional SKS. The SKS-D and SKS-M were modified at factory to be wider and therefor be able to accept the AK magazine.
The only way to make your Yugo capable of accepting the AKM magazine would be to cut-out a section of your receiver, then weld on new sections to widen the body to the point of accepting AKM magazines. Then you will have to cutout the forward portion of your magazine well and weld on a replacement with a notch in it to give the lip of the AKM magazine something to grab onto. Then your going to need an AKM style magazine catch, and weld or jury-rig it to the portion of the trigger group where your SKS magazine catch was (that's right, it has to go to).
But your still not done! Now you have to file off a portion of your bolt. Instructions on how to do this can be found in a sticky thread on
www.sksboards.com. It's in the "General" section.
This will not be an easy project. It's going to take a lot of cutting, welding, and filing before your close. You'll have to be thinking about how the magazine will sit every second of the build, because once your done, if the magazine sits off just ever so slighty, your rifle will not be able to chamber a round and you'll have to cut it up and start all over again!
If that sounds a little over your head, out of budget or just to time-consuming, please check into the Tapco 20 round SKS duckbill magazines. They're the only SKS duckbill magazines that are rated as "fairly priced" and "working" amongst SKS owners. There are higher-cost alternatives, like the HITECH detachable magazine system. But when I say HITECH is higher cost, I mean they charged $95.00 for one magazine and adapter. Ordering an extra magazine they only knock off ten bucks.
I hope you be safe and have fun!