Learn Russian: Это стоит пятьсот рублей.

The verb стоить means to cost, and its he/she/it form is стоит (with the stress on the first syllable). There is another verb, стоять, meaning to stand. Its matching form is spelled exactly the same, but the stress is on the last syllable. Since we are talking about money here, it is clearly the verb for costing!

How is the word пятьсот put together?

It is literally a combination of пять (five) and сот, which is a special plural form of сто (hundred). For the hundreds from 500 to 900, you just attach this ending to the base number to create a single word.

Why is the word for roubles in the genitive plural (рублей)?

In Russian, quantities ending in numbers 5 and above (including 500) force the noun that follows them into the genitive plural case. The dictionary form is рубль, which is a masculine noun ending in a soft sign, and its genitive plural form is рублей.

Could I use Этот instead of Это here?

No, because here Это is used as a standalone pronoun meaning that or this general thing. When acting alone as the subject of a sentence, it always takes the neuter form это. You would only use этот if you were pointing out a specific masculine noun, like in the phrase Этот суп стоит пятьсот рублей (This soup costs five hundred roubles).