The size issue is certainly a main problem. It may be your only problem.
I suggest you do decrease the partition size to just under 250GB. Then use the free version of this software which I also use and is popular with Forum Members:
Macrium Reflect FREE Edition - Information and download
The downside is that you make the pe recovery DVD and this involves a one off download of Windows WAIK (1.7GB unfortunately).
Note that even when you reduce the partition size you will not be able to use Windows imaging to reimage to the 250GB HDD. The size of the 500GB drive will still be in the MBR partition table and Windows will balk.