The issue you must answer is whether or not the IDE drive controller built into the machine's mobo (and thus its BIOS) includes what is called "48-bit LBA Support". Just plain "LBA Support" or "Support for Large Hard Drives" is not sufficient. The "48-bit" part is important. That feature is necessary for your system to be able to use any HDD over 137 GB. Given the date when these units were sold, there is a good chance it DOES have that feature. At worst, there is at least a good chance that the BIOS in it can be updated to a new version that does have the feature. Contact Dell Tech Support to get your answers.
You also need this feature in the OS you are using. If you are using a Windows version, it MUST be Win XP with at least Service Pack 1 included. In fact, if you're using XP I recommend you upgrade to SP3, the last version. If your OS is Vista or Win 7 you DO have the feature and can stop worrying there.
If you have only the first version of Win XP or some earlier Windows installed on the old 40 GB drive, you MUST upgrade BEFORE you go to install the new HDD. Otherwise it cannot handle the 500 GB unit, even if your BIOS can.
When proceeding, I highly recommend that you go to the WD website and download and install their utility Acronis True Image WD Edition (assuming you do buy your new HDD from Western Digital, and not some other manufacturer). READ the manual for this, especially the part on CLONING your small older drive to a new larger one. That makes the whole migration process really easier. NOTE one peculiarity I've seen in these cloning systems. As a first step they must Create on the new HDD a Partition (a designated portion of the HDD) to be used as a "drive" with its own letter name, then Format it. (ANY drive needs to have one or more Partitions Created on it and Formatted before an OS can use it.) The cloning system will do the job for you. BUT they often have their default options set to make the new clone the same size as the old original drive, leaving you with a VERY small new C: drive and a lot of unused space in which to create another Partition to be used separately. In my experience, most people like you want ALL of the new HDD to be that C: drive. To do that you must find the menu choices to specify the new Partition's size yourself, instead of just letting it use its default settings.
Thank you very much for your thorough reply. I greatly appreciate it!
I'm actually working on the machine for my church. It has been used for about 4-5 years by technically challenged staff, and some of Window's files are corrupted. Also, system is chock-full of viruses. After analyzing the issues, I concluded that it would be better to backup the data on the disk and reformat.
Another issue I found was that 37GB of the current HDD was full. Therefore, I decided that it would be better to upgrade to a newer, larger HDD that would leave more than enough room for the staff member (secretary) to store their data.
I'm planning on partitioning the HDD into two different partitions. One for my OS and applications, and the other for storing files.
I was contemplating whether or not to install Windows 7. However, I found that my graphics card won't support the Aero eye-candy. I considered upgrading the graphics card, but it appears that most cards today require a minimum of 300W and up. Unfortunately, the PSU installed is only 250W.
Besides a couple of incompatibility issues, I've read feedback online from other Dimension 3000 owners, and they felt that XP ran a little more smoother on the unit vs Win7, as the Dimension 3000 IS nearly six years old. So, I might just keep XP on it for now.
As I said earlier, if you're continuing using XP, I recommend you upgrade to SP3. Given that your HDD is VERY nearly full already, you may not be able to do this completely before upgrading to the larger HDD. So at least make sure that the version of XP that is installed has at least the SP1 included. Then you can upgrade to the larger HDD and LATER upgrade XP to SP3.
Since you plan to make two Partitions on the new HDD, I'll modify my note about Partition size slightly. When you use the Acornis True Image WD Edition for cloning, DO find the menu choices to intervene and create a new Partition LARGER than the 40 GB you have in the old HDD - you already know it may be too small. You can specify any size you like. After you have made the clone you shut down and remove (or at least disconnect data and power from) the old 40 GB unit and substitute the new unit for it by swapping cables. What I try to do is hook it up so the new large HDD is connected to the same port as the original small drive. For example, if the 40 GB is now the Primary IDE Channel Master device, I'd set the jumpers on the new 500 GB unit (AFTER making the clone to it) as a Master, unplug the end of the 80-conductor ribbon cable from the 40 GB old drive, and plug that into the new 500 GB unit. That way when you reboot the BIOS will still use the Primary Master device as the boot device and it will work. What I recommend after that is to ensure by using that the new clone system does everything right for a while. THEN you can decide what to do with the idle 40 GB older HDD. Until you do something, it is still a perfect backup of your system right up to the preparation of the new clone unit.
AFTER you have the new system running, you can use Windows Disk Management to go to the Unallocated Space left on the new 500 GB unit and Create and Format your second Partition for use as a data drive. Or, of course, you could use the Acronis True Image WD Edition utility for that - it does a LOT more than just cloning! In creating that Partition, it should be a Primary Partition but it does NOT have to be bootable.