My girlfriend and I are going shopping for a bike for her. But, she really has **** all money to spend, a maximum of $350nzd or about $200 american. the only option I can think of is to find a cheap hardtail mountainbike with provisions for racks and fenders, and swap the knobbies out with thinner slicks, and putting on pedals with toe clips. anything I should watch out for? don't mind if she's slow but I don't want the thing falling apart. I hear that a freehub is essential, that other hubs will break under the load. Is this true?
Anyway some background info: We plan to tour in summer, and do some camping, but seeing as I'd have an awesomer bike and am stronger (plus it'd make me seem more manly) she probably wouldn't be carrying anymore than her clothes and a sleeping bag. she's very light too, around 40kg, so an ultra strong frame shouldn't be needed. Buying second hand isn't really an option, as it'd take ages to find something that fits her (she's only 156cm tall.)
Sounds a sensible approach. Beware of those massively strong, stiff and heavy frames in entry-level MTBs. Bikes such as the Specialized hardrock are designed to appeal to head-banging teenage boys.
What brands do you have locally?
Fuji are always good for entry level women's bikes.
Check out http://www.fujibikes.com/2005/bikes.asp?id=53
The Giant Upland is another decent entry level with Women's option.
You can use different brands to get the exact size you need, one brand often has the "inbetween" sizes that another lacks.
You may have trouble finding a higher grade of bike on the used market but it is worth trying.
Does your lady currently ride a bike? If so what? Is this dream perhaps imposing some unrealistic expectations on her (I get this clue only from the fact that there is some pressure -- used bikes aren't an option)?
First of all, the free-hub question. Every bike sold new (with few exceptions that will not concern you) are sold with a freehub or freewheel (for your purposes, they do the same thing). At the price point you are suggesting, it is likely to be a seven-speed freewheel you will get.
Giant is one brand I know that produces a bike that can do what you want. It's the Upland model. Alloy frame, but low-level components; despite that, it should serve your needs quite well. It also comes in an Extra Small Size (15cm, IIRC). If your LBS says no, insist they find out where they can source them, or go elsewhere (a reference point: We have had several women the same size as your girlfriend on a commuter project, and we had trouble sourcing small-enough bikes for them -- the local Giant dealer in Hobart, Tasmania, came up with the model required).
IIRC, the Upland had eyelets on the rear drop-out for a rack. You should be able to get away with that plus a handlebar bag. The MTB gearing should suit her, too.
But be aware, higher quality is going to cost you more than your budget, unless you are patient and wait for the right-sized used bike to come up. The lower level components on the Upland are quite serviceable.