I have the following equation modelling flow in a porous medium modeled by
$$ (u^2)_x+u_t=0, \hspace{15pt}x>0,\hspace{5pt}t>0 $$ I have the initial condition: $$ u(x,0)=\frac{1}{2}, \hspace{15pt}x>0 $$ And a boundary condition $$ u(0,t) = g(t) = \begin{cases} 1,&0<t<1\\ \frac{1}{2},&t>1 \end{cases} $$ I know that I need to use the method of characteristics here, but the two conditions have me confused, as I'm not sure how to consider the initial condition. I end up getting base characteristics of $t=\xi + \tau$, and $x=2g(\tau)\xi$ from the boundary condition, which give me something like,
$$ u(x,t) = g(t) = \begin{cases} 1,&\frac{1}{2}x<t<1+\frac{1}{2}x\\ \frac{1}{2},&t>1+x \end{cases} $$
But this can't possibly be right because I haven't even considered the initial condition! Starting from the initial condition, I get, $t=\tau$ and $x=2f(\xi)\tau + \xi$, but then I don't know how to consider the boundary data.

You are almost there. The two pieces $t=0$ and $x=0$ made up our Cauchy boundary conditions in this case, so you really need to use both to get (almost) the entire domain $x>0,t>0$.
By method of characteristic, the parametric equation for the characteristic curve is $$ (t,x,u)(\tau)=(t_0+\tau,x_0+2u_0\tau,u_0). $$ Now we impose the initial (in $\tau$) condition $$ u_0=u(x_0,t_0) =\begin{cases} \frac12 & t_0=0\\ g(t_0) & x_0=0 \end{cases} $$ and so $$ u(x,t)=\begin{cases} 1 & \frac12x<t<1+\frac12x\\ \frac12 & t>1+x \text{ or }t<\frac12x. \end{cases} $$