500GB partitions should be fine
It's not that the Xbox can not read drives bigger than 500GB but partitions
The bigger the cluster size the bigger the partitions can be if I remember that correctly
No idea what problems the xbox may have with cluster sizes above 32 my 750 GB drive was fine with it
You only need an E drive anything after that is just a bonus
C:\ is the original system and the 1st Partition
D:\ is the DVD drive
E:\ is the second partition of the Drive, normally the place that a softmod would be stored
F:\ is the 3rd Partition, normally where software such as games are stored
G:\ would be the 4th Partition more games or other media
Not sure if you can make any more that that
But sounds like you have all the space used for the 4th partition with only small partitions used for C, E and F