You have too many things trying to control the shipping going on at the same time that are fighting one another ...
Are you using the
Always Free Shipping: YES
to get free shipping for Retail Customers or to show the Free Shipping image?
Always Free Shipping YES is designed for everyone to be free shipping so you need to customize around this for whole sale customers ...
If you have set the value in the Modules ... Order Totals ... Shipping ot_shipping to 0.00 and enabled it ... that is going to make everything Free Shipping for everyone ...
This conflicts with Always Free Shipping as now it is not even looking at that setting ... it is shutting down all of the shipping modules to give Free Shipping to everyone ...
To make your shipping work correctly, you will need customization ...
You want all Retail Customers to have Free Shipping ... and you say you have marked all Products as:
Always Free Shipping YES
For this you need the FREE SHIPPING! freeshipper shipping module installed ...
You want to have Whole Sale Customers have UPS shipping up to $500 ...
You want to have Whole Sale Customers have Free Shipping on orders $500 or more ...
Correct?
Do your Products have a Product Weight so that UPS can calculate the shipping?
Without weight, there can be no shipping quotes from UPS with any accuracy on the Products for whole sale orders under $500.00 ...
You should customize the Shipping ot_shipping to use 500.00 for the Free Shipping amount and to work for the Whole Sale Group only ...