Hi Involute,
> 1. How do I draw an arc with a radius that's precisely .5" larger than an existing one?
You can use the Construct > Offset command to make a new arc that has a larger or smaller radius than the existing one, but it will have the same center point as the original.
From your model you posted, it looks like you want to have your new arc have the same endpoints as your original arc  so you probably don't want a .5" radius increase because the radius of an arc is measured from the arc's circle center point.
For your case here I'd say draw a line 0.5 inches long coming up from the midpoint of the arc going upwards, and that will then give you the snap point you need. You can then use Draw curve > Arc > 3 pts to make an arc that goes through the old arc's endpoints and also your new snap point.
> 2. Is it possible to edit the existing arc instead of drawing a new arc?
It is possible to edit the radius of an existing arc, you can do this by selecting the arc and clicking on the radius line in the object properties panel in the upper right area of the main window. But the edited arc will have the same center point as the original and it doesn't look like that is what you need.
 Michael
