Hey. Same problem here. Tape stuck in pal gy-dv500 for years now, repair too expensive. Using it only for studio work connected directly to computer with FinalCut for recording – got to try Adobe OnLocation which seem to be great for the same purpose.
To restore field operation – you should look into a FireStore FS-4, they seem to be available at around $800 at amazon, less on ebay.
Let me know if you find a solution.
Cedric
– by the way, hard to find a use for a gy-dv500 those days, with all this HD gear around. What do you use yours for?