If you're a total RAID novice, it may be worth reading some information on the subject. As always, Google is one place to find such information 
Infact googling "RAID basics" should find you links to the RAID Wiki and RAID Basic Training Guides - Intel RAID Solutions (amoungst many others other including links to youtube channels on the subject). Search, find and read.
If you want to be more specific, then googling "hp raid learning" will likely find you a link to Installing and Configuring SAS Hardware RAID on HP Workstations (but likely you need a little basic understanding to fuully absorb that document).
Reading the basics will help you realise that raid volumes are an abstraction from your physical drives. You will aslo appreciate that raid 0 volumes stripe you data across multiple drives improving read and write speeds at the cost of data reliability. Futher more, you will realise that with a raid 0, the volume you create can be sized up to the sum of the capacity of the included HDD. As such, your 2x 500GB HDD will give you a maximum RAID 0 volume of 951GB.
RAID 1 on the other hand mirrors the data on both drives so you get reliability/redundancy at the expense of HDD capacity. The same 2x 500GB HDD in RAID 1 will allow a maximum volume a little less than 500GB (but you'll have redundancy and you data can survive one HDD failure).
When installing Windows 7, a clean Microsoft install image will not have the required drivers to see the RAID volume you previously created. In these cases, you may need to point to a driver (for your raid hardware) via F8 during install process. But in your case, probably, you are using the HP recovery disks and this image has the needed raid drivers (alonmg with all other required drivers and software). As such, you see the volume you previously created so the install/recovery will continue without issue*.
*the proviso is that if you use the HP recovery disk on a system shipped with RAID 1 and this is reflected in a featurebyte indicating such, the HP recovery process reads the featurebyte data during install (to determine what/how to install) and as such may delete your raid0 volume and create a raid1 volumen to which it installs the OS. But i haven't had a HP system delivered with RAID so can't be 100 sure....
To learn more about the install process, googling "hp z820 installing windows os" should find HP Z820 Workstations - Installing UEFI based Windows 7 which should answer all your questions.
Cheers.
[edited]
too slow... ninja'd by old_geekster 