When a 55ml solution of 2.M is diluted to 500ml, doesn't the Molarity of the new solution go down?

Answer 1

Yes.

2 Molar means two moles per liter. This is the concentration.
With only 55 mL of the 2 molar solution you have: .11 moles
(See my work: http://i149.photobucket.com/albums/s52/memeluke/mol.jpg )

When you have the same number of moles in 445 more mL of water your concentration goes down (the molarity).

Hope this helps!