In the base settings it has an option called hold music but the manual does not say anything about putting calls on hold, can you put calls on hold? and also is there a answer machine function?

I think it only works when you have more than one handset and are transfer from one to the other.

I only had one handset and never got Music On Hold to work, not even with the usual Recall to place a call on hold, as I suppose in that instance it's the exchange putting the call on hold and not your phone. So it must only be when transferring from one handset to another.