Splitting up a single library is a manual task. If there are 500 Device sets you will need to do it 500 times.
It's not as bad as seems as it is faster when there are a number of devices are all going to be stored in the same new library.
So right now you have one library file, I'll call it 'My500.lbr'. Say you wish to split that up into ten groups, then you will be creating ten new library files (.lbr).
Now, folders are just folders, as are sub-folders. They are easy to create .Right click on a folder in the Control Panel, select .'New Folder ' . Give the new folder the desired name.
Do the same to that folder you just created to give it a sub-folder.
Your library files (.lbr) can go into any level of the folder tree and can be moved between them.
It's important to plan the structure of the folders you need. Then create all of the folders. The Control Panel view of this folder structure will guide you as you breakup 'My500.lbr'.
Go ahead and do the above and post back and image of your Control Panel.showing the new folder structure expanded.
That will show me you understand establishing a top level folder
Show me where your current 'My500.lbr'. is sitting.
Also, consider downloading v6.6 which you can get from here ftp://ftp.cadsoft.de/eagle/program/6.6/
Your license entitles you to it.