Perhaps you meant
xterm -sl 500
The -sb option uses no value.
The manual page for these options:
-sb This option indicates that some number of lines that are
scrolled off the top of the window should be saved and that a
scrollbar should be displayed so that those lines can be
viewed. This option may be turned on and off from the "VT
Options" menu.
and
-sl number
This option specifies the number of lines to save that have
been scrolled off the top of the screen. This corresponds to
the saveLines resource. The default is "64".