I think they definitely can. Gyros and Accelerometers are cheap and probably more accurate than those used in 60s. They will have to isolate these sensors form the rockets vibration else they will go crazy. But I think it can be done. And they probably have good enough radar system. I think building a inertial guidance system would be pretty easy. The rocket would be the hardest part. You need a rocket that you can control with good accuracy and precision because being a meter/s fast or slow will lead to missing the target by a few kilometers. But hey why worry about few kilometers when your bomb's kill radius is 20 kilometers.
All what they have, it old soviet developments in space technology. MEMC-gyros are unusable for navigation system of space rocket. Sensors need protection from vibration, static electric and other. Those sensors have inadequate reliability and they need redundancy and duplication. As a result - size and weight are increases.
For using inertial guidance system you must have the good experts in ballistics.
I think north Korea not have experts for building and using inertial guidance system, not have experts for building systems on modern electronic components.
If building navigation system on components from digikey was simple, we have many robotic submarine by group of hobbyist or students
But I know of one such development
I hope you will understand me despite to my bad English