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There are a lot of differences between the two, and as a DJM-600 owner and user of (some of) the functions that make it different, I will explain them here.
The DJM-600 has an extra line input, though the 500 still have two CD inputs, so you can hook up two cd decks to both.
You can select the resistance levels of your crossfader, which is useful depending on if you use the crossfader vs the volume sliders to mix with. The different selections has helped me make the transition of the bass much smoother than without this function.
The effects processor has a sampler etc, which you can listen to in the headphones (what the effect sounds like with the track before you play it live). You can take loops and beats from other tracks and use them in the tracks you are playing live to "remix" live.
The 600 also has two effects, auto trans and auto filter which can be used for some wiked effects, if used properly!
Direct beat select allows you, in conjuntion with pioneer cdplayers to have the disc start as soon as you start moving the crossfader over to the other side. This is otherwise known as fader start (I believe these things are the same, though I am not absolutely positive).
The DJM-600 has a VERY useful effects depth level knob. If you use flanging, wah, etc. You may notice that it makes the volume spike a bit. You can controle this with the depth level knob. It it a great way to fade in and out of your effects too to make them more subtle!
(one of my favorite features).
The cut off on the eq knobs are a full 6dB lower than on the DJM-500
I think that the most important feature is that you cannot control the cue/master ratio on the 500! This means that on the 600 you can adjust between only cue and only master in your headphones (or any combination of inputs for that matter) including effects that you may wish to test out before you go live! I've used a 500 a couple times and it is a big pain in the ass when you have two bass beats that are really similar and you can't fade between master and cue to see if the cue beat is slower or faster. This above any other single reason, is the reason to get the 600 over the 500! Those who have a 600 know what I'm talking about and probably couldn't even imagine using a mixer without this function!
The 600 has a talkover button (which is in a very bad place, for me anyway) that silences the music quite a bit to allow the microphone to be used while the music is still playing. I inadvertantly hit it while I'm recording and it sucks!  Though this is not that big of a deal once you learn not to hit it 
The 600 does NOT have a headphone eq, which in my opinion is not really that useful because you can always use the cue eq to add or subtract the frequency ranges that you want.
The 500 has a 1/4 master output, which you will more than likely need and adaptor for if you take your mixer to a club with you. This is more convienent for those hooking it up to their computers, but you can always buy a $2 connector at radio shack etc.
The 600 has RCA record outs, so that you can hook up booth monitors to one out, the main speakers to another out, and a third source to record your set. The nice thing about the record out is that it isn't affected by things like the master volume or balance. Only the two line/cd/phone volume sliders that you are using and the crossfader.
ANyway, I hope that I summed it up pretty well here. I would say that the price for the 600 is well worth it, and as liquid said, it looks better too! Being that the price differece is about $400 MSRP, I'm sure that you can close that gap a bit. I bought mine for $1050 USD almost 1.5 years ago from www.pssl.com
If you have any more questions, I'd love to try to answer them as best as I can!
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