Instences

As many as you want. But depending on the work load in each instance, the number can be very limited, if you want a responsive instances.

One processor and 16gb and 500 GB  is not much for supporting an Oracle dB for a commercial application. Sounds like you are referring to a pc rather than a database server. I suppose you might be using a VM... But I hope not, as licensing on soft partitions is a nightmare.

Long story short: really it depends on the processing requirements, the number of users/sessions and processes you intend to support. A typical install will need 10gb for binaries...and the storage is really dependent on need.

Can you tell us more bout what you're trying to achieve?

The number of Oracle instances that you can create is not directly related to the server hardware.  But, most production Oracle systems will not perform very well on just one disk drive and one CPU.  If you want to create small test systems, you could create multiple instances on a small system like you described.  But, be aware that the performance may not be fast if you do that.