I found an even easier way without using 3rd party software: (I'm using Outlook 2003)
Go to your Contacts Folder... then Import from your personal address book. (File... Import... From another program or file... Personal Address Book).
Once imported, Select All of your Contacts in the Contacts Folder (Edit... Select All...)
Now Forward them as VCard files (either: Right click... Forward Items... OR Actions... Forward as VCard... OR Actions... Forward...) They will all appear as VCard files attached to an email.
At this time Outlook will only let you right click on one at a time with 'save as', but with over 500 you want an easier way. SEND THE EMAIL WITH THE VCARD ATTACHMENTS TO YOURELF. Once the email has been received, you will be able to.
Open the email and you will see your 500+ VCards attached. Click on one of them... then select them all (Either 'Control... A... OR Edit... Select All) With them all selected, you can now Right Click and choose Copy.
Lastly, open or create the folder where you want to save them and Right Click... Paste!
It will take a minute, but all your VCards will now appear in that folder - Enjoy!