Presumably you're booting from the 500mb partition and trying to modify the 1.5Gb partition with Apple HD setup.
I don't really know Apple HD setup or any of the formatting utilities that come with the System well enough to say whether they can do what you want to do as I mostly use FWB Hard Disk Toolkit for my formatting, but knowing how basic they are somehow I doubt it. I know with HDT you can change the size of the partitions without having to reinitialise the disk but I'm not sure if you can create new ones. Theoretically you should be able to simply highlight the 1.5gb partition, delete it and then create new partitions out of the space you created, but I'm not sure if it works like that in practice.
If you only have access to the System supplied formatting utility, your best bet is to simply back up whatever data you want from the 500Gb drive and boot from a system floppy with formatter, reformat the disk and reinitialise it into the partitions you want.
I don't really know Apple HD setup or any of the formatting utilities that come with the System well enough to say whether they can do what you want to do as I mostly use FWB Hard Disk Toolkit for my formatting, but knowing how basic they are somehow I doubt it. I know with HDT you can change the size of the partitions without having to reinitialise the disk but I'm not sure if you can create new ones. Theoretically you should be able to simply highlight the 1.5gb partition, delete it and then create new partitions out of the space you created, but I'm not sure if it works like that in practice.
If you only have access to the System supplied formatting utility, your best bet is to simply back up whatever data you want from the 500Gb drive and boot from a system floppy with formatter, reformat the disk and reinitialise it into the partitions you want.