regular purchased or converted DVD movies are stored in iTunes, but are recorded as movies.
Your hard drive is only 500 GBs in size.
It's time to transfer/copy all of your iTunes, Movies and iPhoto folders over to your external drive.
Then, delete all of the original data off of your internal drive.
What year, model,,screen size, CPU speed and amount of RAM memory installed in your iMac?
I Noticed you are using a USB 2.0 drive. Hopefully, this drive is fast enough to stream your movies libraries to and from your iMac.
Personally, I would've of bought the fastest external hard drive available. A FireWire 400/800 drive is these are much faster than USB 2.0.
In any event the easiest way to transfer your data is to download a data cloning app like Carbon Copy Cloner or Super Duper and completely clone your internal drive to your external drive.
Make sure first, that you find a way to copy/archive what you already have of your external drive as the cloning app will write over this data.
Cloning gets you an external drive that is now has a bootable copy of your version of OS X and a way to boot your iMac if something goes south with your internal drive.
Another way to approach it is to simply keep your music, video, etc libraries on an external drive permanently by following these instructions:
Once you have them on an external drive and tested to make sure it works, then you can delete the files from the internal. Please note: your internal drive needs an absolute minimum of 10 - 15 GB of empty space available at all times for the OS to run properly (more space is better).
Aside from that, you should then copy/backup those libraries on another drive so you have another copy just in case.
FWIW, I agree about getting a drive with Firewire - USB 2 is just too slow. And, WD drives are ok, but their enclosures are subject to failure. And, if you want to go the bootable clone route, please note that a lot of WD drives do not support booting from it:
This would, also,,be a good time to start thinning out files and data.
Here are some additonal things you can do before cloning your internal drive.
Have you emptied your iMac's Trash icon in the Dock?
If you use iPhoto, iPhoto has its own trash that needs to be emptied, also.
If you use Apple Mail app, Apple Mail also has its own trash area that needs to be emptied, too!
Other things you can do to gain space.
Delete any old or no longer needed emails and/or archive older emails you want to save.
Look through your Documents folder and delete any type of old useless type files like "Read Me" type files.
Again, archive or delete any old documents you no longer use or immediately need.
Download an app called OnyX for your version of OS X.
When you install and launch it, let it do its thing initially, then go to the cleaning and maintenance tabs and run all of the processes in the tabs. Let OnyX clean out all web browser cache files, web browser histories, system cache files, delete old error log files.
Also, you can speed up your iMac by adding more RAM memory.
OS X and applications will run better if you install more RAM.
Your iMac can take up to 32 GBs of RAM.
I Would suggest you install, at least, an additonal 4 GBs of RAM to bring your total RAM to 8 GBs.
Add more if you can afford it.
Reliable and correct Mac RAM can be purchased from online Mac RAM vendors.Crucial memory or OWC (macsales).
i do have a time machine backup for my entire network. What i am still puzzled about is why is my internal drive showing the majority of the drive taken up by "movies" when i store all imovie projects and download all events directly to the external hard drive. My internal drive only shows 2.07 GB in the movies folder but the system info shows 247.34GB (see screen shots above).
You keep talking about iMovie projects?
Do you download or convert movies (DVDs) to watch?
Like I referenced earlier, these movies go straight into the iTunes app and library and get recorded as Movies on your hard drive listings.
If your iTunes library is on your internal HD, this is where all of the other movie content went.