See that black one labeled "Disk 1"? That is an unallocated disk. You can right click it and create a new simple volume from it.
See that black segment in "Disk 0"? That is 906 megabytes of space that is inaccessible. Unfortunately, due to the order of the partitions, you will not be able to recover that missing free space. You can wipe the drive, thereby deleting everything, and reinstall Windows in order to acquire that space again.
You mentioned that the E: drive went from 250 GB to 2 GB. Currently the E: drive is "HP_TOOLS" which seems like it is a part of the recovery partition. Normally that partition would not be labeled "E", it would be somewhat hidden. However, you may have totally corrupted your recovery partition by reformatting the HP_TOOLS part. When the recovery software activates it will look for files in the HP_TOOLS disk and find nothing, preventing any recovery from occurring. I am not 100% this is the case as I have rarely worked on HP hardware to know exactly how they set up their recovery media. That is just what it looks like to me from your screenshot.
Your other drive, "Disk 1", has a capacity of roughly 500 GB. Could that be where your 250 GB came from? It's the only drive on your computer that has something close to 250 GB.