Thanks, that's good to know.
I found a tutorial where somebody modded the fat caddy for use with the slim-caddy enclosed HDD:
http://www.se7ensins.com/forums/threads/how-to-make-an-adapter-to-use-slim-hdd-on-fat-console.786859/From what I've read so far, it seems like the 500 GB capability was added to the system's software later on with updates. I see new genuine 250 GB slim and 500 GB slim drives go for roughly the same amount of money now, so I'd like to try the bigger option, but still have a fear that the fat console might have trouble recognizing it, even though it has all updates.
But then, I see those Chinese bootleg fat drives on eBay with 500 GB capacity and screenshots of the dashboard showing the usable capacity. So if even the shitty hacked bootleg drives work on unmodified fat consoles, then genuine ones should too, shouldn't they?

EDIT: Well, I found these two tutorials:
Original Xbox 360 500gb HDD upgrade tutorial (any slim HDD to original)
Real Xbox 360 hard drive Disassemble
Looks like the hardest part is the dissassembly of the slim drive. Everything else should be a piece of cake. At least I hope so, cause I've now ordered everything I need.
I think I know somebody who could make good use of the old 120 GB drive afterwards.