I don't think so, but there are microphones you can attach to it and put outside the bag so it will work that way. Many of them are small and not very noticeable. The microphone on the recorder is very sensitive, and will pick up the noises of the bag much more than outside of it.
I ended up sending it back. The choices for the microphone setting specifically for music should be listed....if not...then probably not. I didn't use it for the purpose you mentioned...I ended up going with a Philips 55000 which is around $100. It should be good for your purposes, there are microphone settings/self adjustments I liked better for my use. Although the Sony quality seemed adequate.
This recorder acts just like a flash drive when you plug it into your computer and it records mp3 files. So,if you can get the files off the other recorder and onto your computer, then convert them to mp3 (if they are not already in that format), you can copy the files from your computer and onto the Sony recorder and play them.