I have a 40A electrical main panel with fuse plugs in the non walk-in
master closet. This is a 1950 vintage house with K&T ungrounded wiring.

I wanted to update K&T with Romex and ground, new outlets, GFIs, the whole
works updated. Also replace the existing panel with new panel and circuit
breakers. Is panel location in closets still allowed or do I need to find a
new location for it?

One possible location is to turn around the panel so it face the hallway.
What is a good way to hide this pane, hang a picture over it?