|you probably won't be able to "merge" your old OS installation with a new one.|
Copying DATA files (pictures, mp3s, etc) is very easy: the ol' drag and drop method works great.
Software is another issue entirely, and cannot be migrated. Software installation packages put files and folders in directories on your computer that you CAN see (like in c:\program files, for example). However, the installation also does a lot that you do not see. driver.DLL files need to be registered, registry keys need to be added, changed, or deleted, etc.
if you use an application to clone your current OS installation, and it lets you push your 10GB installation onto a 500GB disk with the rest of the space free, congratulations, that sounds like your ideal situation. But not all applications will give you that option so make sure you know what you're using before you use it. The drawback to this method is that you are not using a fresh, clean installation of the OS, so all corrupted files, orphaned registry entries, malware, etc. will copy over with your old OS.
So I think those are your options: If you install a fresh OS, you probably won't be able to migrate your old software applications. If you clone your old OS installation, it will not be a fresh OS install.
Hope that helps.