The mode dials on all bodies are known to malfunction from time to time. These are after all mechanical devices and the contacts wear out of get misaligned. I seem to recall another poster having a similar problem (I don't recall which body). The work around was to set one of the user modes up as manual. You might try "working" the dial by rocking it back and forth a little over the M setting or even setting it off the click stops between Tav and M or M and B. My K-10D won't go into spot meter unless I set the lever between spot and center weighted. And sometimes it won't switch into pattern metering mode until I "work" the switch on the pattern position. Either the contacts are worn or out of alignment.
If your K-500 is still under warranty I would send it in for servicing.
Of course if Adam's solution works, then you are set
BTW: I just noticed that the K-10D will take the ISO out of Auto when you switch to M and will not let you set it to Auto ISO when in M mode.