It might be trying to clone the entire partition, which would require the drive to be the same size or larger to avoid shrinking partitions and potentially messing with the data.
I did a bit of research, the only software I could find that might allow this is ShadowCopy - it doesn't specifically say if it does or not on the website.
If it doesn't, you may have to shrink the partition on your 500GB down to 120GB, and then try to image it from there. You'll want to use something like a Gparted live boot, you can use Unetbootin to create the bootable flash drive.