You can have as many pairs as you have controlers on your system, so yes, you can have 2 RAID 1 Volumes.

 

With RAID 0 you will notice a performance increase on disk access, but be aware that if any of the disks fail, you will lose EVERYTHING on the two disks..

 

You can RAID the two volumes any way you like so you can set up the 2x 500Gb drives on a RAID 1 volume and the 2 x160Gbs on a RAID 0.

 

Assuming you are using the built in RADI and not the add on pERC card, the instructions can be found here

 

http://support.euro.dell.com/support/edocs/systems/ws690/en/ug/advfeat.htm#wp1056903

Thank you for the help and link, so do I need to purchase an additional controller or does the built in allow for two separate Raid configurations?

 

Also I am a little confused if I will lose all of my data when setting this up (either in a 0 or 1 configuration)??

You will not require an add in card as the built in controller will do RAID 0 & 1 with no problems. the add in card adds the RAID 5 functionaility

 

Yes, you will lose all your data when setting up the RAID volumes so back up your data first.