Ok, it sounds like you increased the disk space in the virtual hardware, but haven't actually resized the drive inside the guest OS. You can do that by booting into recovery mode in the guest, running disk utility, and then expanding the drive.
Alternatively, you can create a new VM, and then before booting the installer customize the configuration to have a 500GB hard drive. When the installer runs, it'll use the whole drive.
Make sure you do not preallocate the drive, and do split it into chunks.
