The problem is that entanglement doesn't mean that a measurement on the first particle determines the outcome of the second. Although this is often perpetuated, it's not the gist of entanglement.
Entanglement is (mostly?) nonclassical correlations. Bipartite states are correlated, when the outcome of the measurement on one particle tells us something about the outcome of the measurement on the other particle. In your case, this is true and thus the states are correlated. The key difference between correlations and entanglement is the question, whether the states are nonclassically correlated.
In your case, you could imagine the following protocol: Charlie picks a bit (0 or 1) at random from a uniform distribution, duplicated it and gives one of the bits in a hidden fashion to Alice and the other to Bob. The resulting state of the sytem is the one of your question and, if both Alice and Bob know what Charlie has done, "measuring" their bit (i.e. looking what it is) reveals to them what Bob will measure. Since I didn't use quantum mechanics at all, this is what we would consider as classical correlations.
So what's the business with entanglement? To see this, let's have a look at a truly entangled state:
$$ \rho= 1/2(|00\rangle+|11\rangle)(\langle 00|+\langle 11|) =1/2(|00\rangle\langle 00|+|11\rangle\langle 00|+ |00\rangle\langle 11|+ |11\rangle\langle 11|)$$
If you now measure in the $|0\rangle,|1\rangle$-basis on Bob's side, you will - as before - know the configuration of the system on Alice's side immediately. The states are, once again, fully correlated.
But now let's take the basis $\frac{1}{\sqrt{2}}(|0\rangle \pm |1\rangle)$ on Bob's side. Annd this is where the difference comes in. If you measure your state (let's call it $\rho_{clas}$ in this basis and the outcome is that it is in state $\frac{1}{\sqrt{2}}(|0\rangle + |1\rangle)$, you can easily calculate that at this moment, Alice's state is given by
$$ \frac{1}{2} |0\rangle\langle 0|+|1\rangle\langle 1| $$
so if Alice measures in the same basis, she will obtain any one of the the states $\frac{1}{\sqrt{2}}(|0\rangle \pm |1\rangle)$ with equal probability (as before) and you can't predict anything from Bob's measurement outcome.
For my state $\rho$, this is completely different. Here, the outcome on Alice's side after Bob obtained $\frac{1}{\sqrt{2}}(|0\rangle + |1\rangle)$ is
$$ \frac{1}{2}(|0\rangle+|1\rangle)(\langle 0|+\langle 1|) $$
hence Alice will obtain the same state as Bob, when she measures. And this is it: You can prove that correlations like this cannot occur with separable states. It's just not possible to have this kind of perfect correlation when you measure in different bases (see Bell inequalities).
The above picture is a bit simplified. In particular, the complete link between nonclassical correlations and entanglement is not completely clear. For instance, not every entangled state violates a Bell-inequality, so the correlations might be a bit more intricate, but the above should tell you enough to answer your question. Also, it is not clear whether separable states might not also sometimes have nonclassical correlations and maybe there is a better measure of "nonclassical correlations" than entanglement (see quantum discord), but this is still debated upon.