My wife wants a moutain bike (for all purpose riding) she is not and advanced rider, but just wants something to get some exercise with. We live in Albuquerque so she will have the opportunity to explore some terrain. She 5' 2" and I need to know what is the right size for her and I would also be open to suggestion about some good entry level bikes.
Catching his breath alongside a road near Seattle, WA USA
1999 K2 OzM, 2001 Aegis Aro Svelte
Will she be doing or eventually be doing technical terrain? If not then maybe a hybrid might be a better choice. Hybrids can tackle upwards of light trails. If you go that route, then I would suggest something like the Specialized Sirrus, Trek 7300FX or Fuji Silhouette. If you're looking for a 26" tyre bike so you can later fit more aggressive tyres, then you might want to look at something like the Gary Fisher Cronus or Cannondale Bad Boy. Also, keep in mind that unless she's really intending to get into rough terrain then you probably want to steer her away from suspension. A quality rigid carbon or cro-mo fork can more than sufficiently handle light gravel trails.
If she's going to be doing real mountain biking then you might want to look at something like the Specialized Hardrock. Check out The "around" $500 MTB thread for good suggestions.
As far as sizing goes, my rough guess would be something in the 44cm range for hybrid frames and the 14" range for MTB style frames. However, bear in mind that there's quite a variation between manufacturers so you should probably take her to the LBS to try out a few bikes in person. The LBS should be able to help her out getting fitted too.