Is it an SDHC card? Those (and drivers for them) didn't exist when the m500 came out.There are non-SDHC 2GB cards out there, but they're rather thin on the ground, so it's fairly likely you have SDHC.
I
think Dmitri Grinberg wrote a SDHC driver for PalmOS (memory is fuzzy, though), so you may be able to find it if you hunt around. It'll go in RAM and get lost if you do a hard reset, so don't use the card as a primary system backup. Alternatively, it may be possible to buy a 2GB non-SDHC still - try Newegg. That's where I bought the ones (PQI AE58-2030R and a Transcend) that I run in my Zod. But be careful, sometimes it's hard to ascertain from the product listings which kind they are.
PS. Try here for the driver:
http://www.palmpowerups.com/index.php. Looks like you'll also need a FAT32 driver.
PPS. Oh drat, m500 isn't in the supported device list. Looks like a regular SD (not SDHC) card is your only option.