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2)I read somewhere that the PATA to SATA adapters only address up to 500GB, is that true? If so, are there others available that exceed that limit?

That doesn't sound likely. There is nothing "magic" for PATA drives other than the "128GB barrier", beyond which a new set of R/W opcodes and protocols is used ("LBA-48").

I really expect that anything that works for, say 160GB, will work equally well up to at least 2TB. At 2TB, a 32-bit calculation limit comes into play for some devices/software, including the empeg.

Cheers