1. Let's assume that you're talking about random error. If you specify the error in the volume with $\pm$, this is probably the case---systematic error in this case would have a single sign; for example, if the scale marks on the side of cylinder were shifted by $\rm 0.5\ cm^3$ down from what their true values should have been, you'd have a systematic error of $-0.5\ \rm cm^3$ (the negative sign tells you that your readings are $0.5\ \rm cm^3$ lower than they should have been).
You can say that the error in a sum will be less than or equal to the sum of errors. It's better to say that the uncertainty in a sum is the square root of the sum of squared uncertainties:
$$\delta(V_1+V_2) = \sqrt{\delta(V_1)^2 + \delta(V_2)^2} = \sqrt{\rm(0.5\ cm^3)^2 + (0.5\ cm^3)^2} = 0.70_7\ \rm cm^3$$
For a product or quotient, you can say that the relative error will be less than or equal to the sum of the relative errors in the measurements. It's better to say that the relative error in a product or quotient is the square root of the sum of squared relative errors:
$$\begin{array}{rcl}
\delta(C_{dilute}) &=& \delta\left(\frac{C_{stock}V_1}{V_1+V_2}\right)\\
\frac{\delta(C_{dilute})}{C_{dilute}} &=& \sqrt{\left(\frac{\delta(C_{stock})}{C_{stock}}\right)^2 + \left(\frac{\delta(V_{1})}{V_{1}}\right)^2 + \left(\frac{\delta(V_{1}+V_2)}{V_{1}+V_2}\right)^2
}
\end{array}$$
...can you take it from there?
2. Let's assume you have systematic error, that is, you actually meant something like "The cylinder always reads $\rm 0.5\ cm^3$ too high". You will need a definite sign on a systematic error, not a $\pm$.
There are several ways to proceed here. Let's take the easiest route, which is to estimate the systematic error in the concentration as the difference between the concentration and its perturbed value (the value with all of the volumes having the systematic error added in). If your systematic error in volume was $\delta V = +0.5\ \rm cm^3$, you can estimate the systematic error in the concentration as
$$\begin{array}{rcl}
\delta{C_{dilute}} &\approx& C_{dilute}^{perturbed} - C_{dilute} \\
&\approx& \frac{C_{stock}(V_1+\delta(V)}{(V_1+\delta(V))(V_2+\delta(V))} - C_{dilute} \end{array}$$
The sign on this error will be important; it tells you whether the systematic error in volume makes the concentration higher or lower than its "true" value.
Note: The above calculation is just an estimate of the error. You can do a better job using derivatives here. I'll show you that if you want to see it.