I can get you close, but understand that the $500 won't cover cables, stands, etc. One big issue is whether your mixer provides phantom power, which is required for most condensers, which are usually used for drum overheads. If you have phantom power, the B1's mentioned above are OK. I prefer Marshall MXL603- a matched pair is $200 (all prices I'm quoting are new, from 8thstreet.com). Bass DI mentioned above has issues- namely, you can't hear the bass when you play, which requires a headphone amp and headphones. Cheap mics for kick and bass- Audio-Technica Pro 25. They are $60 each. You'll need 4 mics for drums- kick, snare, and 2 overheads. snare and guitar amps use basically the same mics- Sennheiser e835 or e609 silver ($100 new) or more SM57's. The 57's are easier to find used, in the $60 range. They are $80-100 new.
If you don't have phantom power on your board, you have to use more dynamics as overheads, and the SM57's are barely useable. Vocals are an issue- If you jack the vocals into a PA, it will bleed to every mic in the room. If you don't, then the only way you can hear the singer is to get a headphone amp, and a bunch of headphones.
Ultimately, you come up against the big paradox of band recording. To record everybody simultaneously takes a bunch of mics, stands, cables, preamps, headphones, and headphone distribution, as well as a good mixer. That means a lot of money. It's cheaper to record the parts one at a time, but then the musicians have to be a lot better. Usually, if the musicians were that good, they'd have enough money to buy all that gear. See the problem? The truth is, $500 really doesn't cut it. It's barely enough for a very entry-level mic kit. It doesn't cover the peripherals. So- the first big question is- Do you have phantom power on your board, and do you own any good headphones?-Richie