No, Ponyboy and Dally are not related in The Outsiders, a 1967 novel by S.E. Hinton. You might be confusing Dally with Darry, who is Ponyboy's oldest brother in the story. Darry is short for Darrel, and Dally is short for Dallas.
Dallas—Dally—is the roughest, toughest, most street-wise member of the Greasers, a gang of lower-class kids whose rivals are an upper-class gang called the Socs. Darry—Darrell—is the oldest of the three Curtis brothers (Darry, Sodapop, and Ponyboy). He is in charge of caring for his two younger brothers after their parents are killed in a car crash. The story is narrated by Ponyboy.