It seems that the fuel gauge and the transmission are the only two items I have been able to track down so far as the differences between the two models. I havent heard a peep from Polaris to my inquiry either which is disappointing!
Here goes. 2004.5 has:
An electronic fuel guage in speedo housing
The shift pattern is straight up and down in a row, 04 has a sort of H pattern
The front wheel hubs don't have fillers for hub fluid
The AWD is engaged in the front diff not in the hubs.
The last is the most important. Polaris went to this because they "had good luck with it in the 600"
Dont forget about the new radial tires that they upgraded to. If I recall the shift pattern is still straight for the 04's not the H style. The 04.5's are worth the upgrades in my mind.
Bringing this old post back from the dead... I believe I just bought an 04.5; I have everything listed above (straight shifter, fuel gauge, front diff).
What really convinced me was the 2004 owner's manual.
What they show for the 2004 500 diff is not at all what I have...
... the 2004 600/700 diff is what's on my bike.
Other than the obvious internal differences, the drain plugs are in completely different locations.