The OP never said the line was free. Just that the 500MB of data would be free (as is in plans currently available).
The OP is on a grandfathered plan. Which means they're supposed to be limited to plan options that are explicitly associated with said grandfathered plan. Just like tethering is only available with current plans, it cannot be added free for the older plans. It's a carrier's way of saying "Hey, you want this feature, you need to get with the program and accept a newer plan." With plans previous to the no-contract Simple Choice plans, it was to keep people under contract (which is still a possibility if you have a Classic / Grandfathered plan).
All that said, it's perfectly acceptable, based on the conversation with T-Mobile that is not only printed out, but stored within the account notes, to have said 500MB data added to the line. Whether it be through the channels that be somehow or whether it be added as a separate line item and credited each month. It's he-said-she-said when it comes to a conversation with a salesperson, but this was a conversation where there's proof of the statement.
T-Mobile made a promise (in error), so T-Mobile should uphold it, since it should be possible to do. (on the other hand, if T-Mobile stated 4G data, like they did, and the OP lives in a 2G area and complained they weren't getting the appropriate speeds they were promised, I would say there was no leg to stand on because the Terms say speeds aren't guaranteed).
The steps that have been done (sending a letter to T-Mobile) is an appropriate step. I would also contact T-Force (tforce(at)t-mobile(dot)com) with this information, along with your account information, to see what they can do. T-Force has been able to help a lot of customers with weird situations, such as this, and I have confidence in them that they'll get you resolved.