It is very rare for hard drives to wrongly report their size (as opposed to flash drives), and it may well be that you do in fact have a 1TB drive that the manufacturer for some reason chose to only allocate 500GB for use.
As you have already found the disk management console you can do one of two things, you can create a new partition on that drive (right click the empty space then select "New Partition") and then test that space to make sure that you can safely store data on it, or you can simply right-click your existing partition and (on Vista and Win7 at least) you will have an option to extend that partition to use the remaining space.