Can't detect 500GB full in win XP home

Because you need SP1 at least to detect drive space over ~130 gig.
It is a software limitation.

It looks like the XP Home Install disk you tried is the original version from before the release of Service Pack 1. You need a more recent XP Home install disk. As you've discovered, a version of XP with included SP3 has no such problem.

There is another option. You can go ahead and install the XP Home you have, which will Partition and Format one volume about 128 GB on your HDD called C:, and you can boot and run from that. The rest of the space on the HDD will just be called "Unallocated Space". Then you go to the Microsoft Update website and download all the updates, especially including the Service Pack 3. Once all that is installed, you can use the Disk Manager built into Windows to create and format in the Unallocated Space a new Partition that uses all of the empty space to be one new volume of about 350 GB called (probably) D:. Then you will have on your physical hard drive two apparently separate drives, C: and D: that you can use with no trouble. You will be able to use all your HDD's space, just not in one big drive.