Your system has a SATA II (3 Gb/s) interface which can support any SATA I or II HD. Today you can find very large SATA drives (4TB). But the physical size of the drive must fit within your system. Your system supports 2.5" drive that is 9.5mm in height.
The OS will be your limiting factor OS-X Mac OS Extended format (HFS Plus) volume & file limits. As you can see your limits of the OS are well beyond what your system can physically hold.
The only real issue will be the SATA interface speed. Most HD's today are SATA III (6Gb/s). Sorry to say these drive are to fast for your system. While they may appear to work the I/O difference will cause errors and will over heat your system as your system works overly hard to correct the errors (over heating it). The best thing here is to locate an older drive (SATA II) or make sure the drive you plan to get has a compatibility jumper and the supplier give you the needed jumper to lower the the SATA speed.
And, yes you can put a 500GB drive in. Or even a 1TB drive (make sure it's a 9.5mm version).