While it is tempting to use an MTB as a commuter, the reality is that the knobby tires suck up a lot of energy, and make for a slow, vibrating ride on smooth pavement. I tried it for commuting and immediately swapped out the knobbies for narrow slicks.

I'd recommend either spending as much as you can on a good bike from one of the top names, Specialized, Trek, Giant, Cannondale, or maybe one of the next tier below, but stay away from the department store bikes.

Test ride as many as you can, try different styles. There are all out MTBs with suspension, hardtail, flat bar road bikes. Some will have mountain components, some will have road components...

I was looking at the Trek FX, Specialized Sirrus, Giant Dash (that's the women's model, there's a men's model too) and Cannondale Quick for my wife. All are flat bar road bikes. They would make a great commuter bike that you can also do longer road rides with, but not really dirt trail bikes. They start at around $500.

The other option would be to find a decent used bike. Craigslist is notorious for bad deals. Everybody thinks their bike is worth twice what it really is, until you find someone with no emotional attachment that just wants to give someone else a good deal. Jump on the latter.

And one last bit of advice: Make sure it FITS!!!