The house was built in the 20's, and I was installing some battery powered smoke alarms today. I drilled the pilot holes for the plastic screw anchors and the 'A' word jumped into my head after I looked at the powder that came out with my drill bit. Is drilling into the walls of an old house hazardous due to the possibility of asbestos insulation? Or, would there likely not be any insulation in the interior walls?
It is difficult to say
If you are concerned about asbestos you need to go to your local council and tell them you are concerned about your walls being filled with asbestos. They can check records if any occurances of asbestos builds exist in your area. even if nothing shows up it will be worth doing an independent test if you are still worried.
There are asbestos tester kits available also for DIY- but be advised to wear asbestos protective masks and clothing- if it turns out positive you will need to deal with it asap.
If they find asbestos.. well you need to tell the council and there should be grants available to remove it.
Be careful and wear certified masks and gloves at all times during testing and never reuse any of the kit- dispose at once into bag- into separate container. IF tests reveal negative your stuff can be dumped into normal channels.. IF positive you need your council to collect it and incinerate all exposed items.
It is unlikely that you would have asbestos insulation in interior walls. The powder that you drilled through was probably plaster, which was commonly used (over wooden lath, or directly applied to masonry) for walls before drywall became popular.
Most plaster does not contain asbestos. However some plasters do contain asbestos. A competent home inspector can often tell you, based on the location and construction techniques, whether this is likely. For example, the plaster in our 1893 house contains horsehair, pre-dating the use of asbestos in plaster.
Of course, the only way to be sure is to test it. I'd advise you to test, but from what you've said so far I don't see any reason to panic.