The Goodyear Tire & Rubber Co. has used recycled Firestone 500 steel belted radial tires to build retread tires for sale to motorists, the company revealed yesterday.

The company said it now has ordered all of its dealer not to sell any of the retreated 500's. Last week, the Firestone Tire & Rubber Co. agreed to recall 10 million of the controversial tires which have been determined to have a safety defect.

At the same time it was learned that critical points in the recall settlement were still being negotiated by Firestone nearly a week after the agreement was signed with the National Highway Traffic Safety Administration.

The Goodyear retreated problem came to light when the company called NHTSA to check on the status of such tires under the recall. The Goodyear telephone call to NHTSA raised new questions about how many 500s have been used in the huge retread market, and if such tires pose a safety hazard.

Goodyear produces about a half a million retread tires a year in a retread industry that sells nearly 30 million auto tires a year.

But industry sources say the number of steel belted radials used for retreads is small, since such tires have been in the market for only a few years, and have a longer life cycle than traditional bias ply tires.

Meanwhile, consumers have swamped Firestone dealers throughout the country with queries in an effort to determine whether their tires qualify under complicated recall. Those that do qualify will get a brand new tire and free mounting and balancing from Firestone in exchange for their existing 500's, if the original tires were built before May 1, 1976 and sold after Sept. 1, 1975.

Still being negotiated with NHTSA were the contents of a notification letter to be sent by Firestone to owners of the 500, the potential advertising campaign to announce the recall and the timing of the recall are still points of negotiation, sources close to the talks say.

Several aggravated consumers have called the Center for Auto Safety, a consumer group, as well as NHTSA and The Washington Post to complain that Firestone dealers were not accepting tires for recall, despite the fact that the tires appeared to qualify for a rebate.

The government noted yesterday that consumers who returned their defective 500s prior to the recall announcement, and received only a prorated rebate, could receive another rebate for the amount they paid.

But Firestone has informed NHTSA that there are only some 400,000 Firestone 721 steel belted radials - the tire used to replace the 500 - in its storerooms. Even if Firestone puts its plants on overtime, NHTSA spokesman Bob Cook said, it could take "the better part of a year" to replace all of the outstanding 500's.

Other firms that sold versions of the Firestone 500 under their own brand names, like Montgomery Ward, have not yet set up plans to handle the recall.