The online firmware (available on github) works (I have this one too).
So, I think, your steppers could have a different wiring than the smartfriendz steppers kit. So maybe you could try to keep your connections like this but try to inverse the cables on your RAMPS (for i.e : in order to set the green cable on the left and the red cable on the riht of the connections) --> try to do this for X and for Y, it will run !
On Pronterface, or Repetier, when you press "Home X", the hotend must go on the left until the endstop. When you press "Home Y", it must go on the front until the other endstop too.
According to me, you don't need to enter M500... I don't understand clearly why you try to enter M500.
M500 will permit you to redefine the feedrate, or the acceleration, but I think you don't have to redefine the X0Y0 position like it..