500 StartUps Vs Y Combinator?

No. A particular investor declined to participate on one opportunity to do business with you. 500Startups had opportunity to do business with someone else. These are mostly unrelated to each other.

FWIW: Investors being herd animals, noting fundability of a close substitute generally helps rather than hurts future pitching.

No, you don't fail at life, what it means is that your idea is just getting validated by other people that it has prospect. You should be happy. Now what you need to do is to see that startup's idea and figure out why his/her idea is better than yours, what makes it better than you, so now you need to focus on the competitive analysis and make yours better since technically your idea is still in stealth mode, no one knows. That means you have the advantage to play around your ideas and make it better. :)

No at all. You may also want to read the following part, from YC FAQ page.

Why didn't you accept our application?

Strange as it may sound, the better your application was, the less likely there is to be an answer to this question. So don't take it personally. The fact is, even the best investors are quite bad at picking winners. VC firms consider themselves to be doing well if 4 out of 10 companies they fund succeed.

No, you don't fail at life. PG et al makes a point to explain the team members being more important in the application process than the actual idea.

Having a product is not a big deal,but the way it sell and the unique way of presentation that your product having that matters lot.See there are 100's of school management system but still our product fedena(http://projectfedena.org) enough no of clients and sales leads...so dont let you down..work hard......

It's actually up to you whether or not YC made the right decision. If you stop now, they were right to not accept you. If you keep pushing forward, you can make them wrong. If you push forward and get some traction, they might realize their mistake when you apply next time. A co-founder is probably a good idea regardless.

it means absolutely nothing. If you think you failed and give up then PG was right not to pick you, as you don't believe in your idea and don't have what it takes. Otherwise you just keep going and do whatever it takes to be successful.

What is the company from 500 startups ?

Heads up! That your idea is similar / same as one of the 7 most interested start ups shows that you are on the right track! You should be happy! Find more customers and keep developing, maybe find a co-founder.

I imagine they rejected you because you're a sole founder, plenty of companies who apply to YC and don't get in do well. YC don't have a magic ball that tells them who'll succeed and who'll not.