Hi Damian,
From the net...
In their simplest form, shock absorbers are hydraulic (oil) pump like devices that help to control the impact and rebound movement of your vehicle's springs and suspension. Along with smoothening out bumps and vibrations, the key role of the shock absorber is to ensure that the vehicle’s tyres remain in contact with the road surface at all times, which ensures the safest control and braking response from your car.
My own opinion for what it counts...
The shock absorber on a 500 doesn't have a spring inside, therefore you can push it in or pull it out and it will stay in what ever position you move it to.
The only tests you can do is check there is no oil leaking(some shocks are gas filled), and also that there is no corrosion on the chrome shaft that goes up the middle.
Also do a push/pull test. When you push or pull the shock you should feel a resistance which slows down the movement. That is basically what a shock does. The coil spring is always under tension & controls the ride height of the car. When you go over a hole or dip in the road, the coil spring expands pushing the suspension down keeping the tyre on the ground. If you go over a bumper the coil spring collapses some more, but this is where the shock kicks in by controlling how quick the spring collapses by providing resistance, thus smoothing out the ride of your vehicle whilst driving in a straight line & cornering.
A good test is with the shocks fitted on the car, bounce one corner up & down, if it bounces easy the shock could be faulty, if it goes down but meets resistance and then just comes back up the shock is usually ok.
Hope this helps, but as Peter suggested if you are going for a full rebuild & you don't know the age or condition of the shock absorbers, then for the small cost involved it really is worth replacing the shock absorbers, rubber bushes and joints on the steering & suspension. It will make a world of difference to how your car drives. and the last thing you want to do is take it all apart again after you have lovingly painted parts and assembled them.
Believe me I have done that in the past (mainly when I had less money) and regretted it.