Ok, on your 500GB disk you have a 500GB system, which doesn't like to be shrunk again onto a 120GB disk, therefore we'd have to resize it first.
If you have your 500GB disk connected, you could try the following (assumed you are using Vista or higher):
open a command shell (Start|Run|cmd.exe) and enter
diskpart
You'll get a prompt like this:
DISKPART>
here you can enter the command
list disk
Select the disk you need and hit
select volume 4
(if volume 4 is the volume you want to resize)
and now enter
shrink
the volume will be shrunk to the smallest size possible.
On Windows XP this doesn't work, so I'm not sure what - apart from making a non-resized copy - to do.