For starters, pay no attention to anyone who comes in to tell you that your system can't support using large hard drives over 128 or 137 GB and you need a BIOS upgrade or a updated windows. That is not your problem.
Somehow you have a C: Primary Partition set to 149 GB, plus a second Partition called your D: drive an dlabeled TBC3.1.0 of sidz 7.67 GB with no empty space and a File System called "UDF". I don't recognize that, but maybe someone else will. Since I don't know what the D: Partition is for or what it contains, I can't suggest whether it would be safe for you to discard it completely as you rearrange space, or whether you need to preserve it. That needs to be settled before advice can be given.
So, there's only one Partition of 149 GB on your drive. Somehow that's the size that was created when your OS was installed, and the rest is sitting as Unallocated Space. You basically have three options for how to get it into use.
1. Leave the C: drive Partition as it is. Use the tools built into Windows Disk Management to Create a second Primary Partition in the Unallocated Space on the drive and Format it to NTFS. Use this as a completely separate drive with its own name.
2. Convert the existing Partition to add all the spare space. You may be able to do this if you have Vista or Win 7, again in Disk Management, with the Extend Partition choice. If that does not work, you certainly can do it by buying a third-party tool for the job like Partition Manager.
3. Wipe your disk clean and start as a blank disk so you can Create its first Primary Partition as the whole drive space. Now, obviously you don't want to lose your stuff here. So to do this you need a second hard drive and a software cloning tool. If you buy a second drive from Seagate, get from their website the free utility called Disk Wizard and it can make a clone to the new Seagate drive. BUT the last step will be to clone BACK to the reorganized 500 GB drive, and Disk Wizard will only make a clone TO a Seagate drive. On the other hand, if you have WD drives, their utility is called Acronis True Image WD Edition. In fact, both of those are customized versions of a very good and powerful package by Acronis. Make sure you get and read the full manual for the software, because it can do lots of stuff for you.
The idea here is that you must download and install the software on your existing C: drive. You mount the new second drive in your machine. You run the cloning software tool and make SURE as you do that the DESTINATION drive is the new second HDD, NOT your old drive that has your data! Set the options to make an absolutely complete copy of your current C: drive to the new one, adjusting its volume size to be at least as big as the old C: drive so it will accommodate all the data, and specifying that it must be a bootable Partition. When you are done you shut down and reboot, but tell your machine's BIOS to boot from the SECOND drive and ignore your original. Once you are running smoothly from that second drive you can proceed.
Now, using Disk Management, you go to the old 500 GB HDD and you Delete any and all Partitions it has until it is empty. The next steps (creating a new Partition on it and Formatting that) actually will be done for you by the cloning operation that comes next. Shut down and reboot to be sure.
Third step is, you clone again, this time from the second drive back to the first (500 GB) unit. Make SURE the DESTINATION drive is the old 500 GB unit! This time be sure to search though the menus and tell it to make the Primary Partition it creates to use up ALL of the space on the drive and make it bootable. When done you shut down and reboot again, re-adjusting the BIOS to boot from the original 500 GB unit. When it boots up it will be all your old stuff on your old drive, it just will be the full drive size! Now you can decide what to do with the second drive. If you bought it new for this job, you have some new storage space. I recommend you wipe it clean and Delete its Partition, then create a new Partition that is not bootable and use it for data storage. But if you borrowed it from a friend just for the job, you should wipe all your data off it and Delete the Partition before returning it. If the friend needs it ready to use, check and see how he / she would like its Partitions set up and do that job on it before returning it.
You are moving to Win 7. If you are doing that from an existing Vista installation, you can do it by upgrade of the old drive after all this reorganization is done. BUT if you are upgrading from Win XP, you cannot actually upgrade. You actually have to do a clean install of Win 7, then copy over all your old application software and data files. In that case part of the sequence above in option 3, using a second HDD and cloning, is the one good route, depending on your situation.
To replace XP with a fresh install of Win 7 and a new HDD you will keep in your machine, the simplest procedure is to remove the old drive for now and install the new one, then install Win 7 on it. Once done, re-install the old drive and copy over everything you need. When everything you need has been copied you can use Disk Management to Delete the old disk's Partition and Create a new one of full size, making it non-bootable and using it only for data.
If the second drive is only a "loaner" from a friend you must return, do the first cloning operation to it first. Then remove it from the machine, leaving your old 500 GB unit in. Install Win 7 to it, but in the very first stage be sure to Delete all the Partitions on it. Then when the new Primary Partition is created, make sure it uses up all the available space (about 460 GB) and install to that. When the installation is done you can re-install the second drive and copy over everything you need. As a final stage you do the clean-up of the "loaner" HDD and maybe create a new Partition structure on it for the friend to use.