Buy used. You can get some kick ass bikes if you are patient.
I didn't pay $500 for any one of those bikes in my sig. I have broke $500 on a couple doing upgrades.
Whats not in my sig is the bike I picked up yesterday for $180. 54cm Cannon dale R1000si that was $2200 new in 2001. Campy wheels, Utegra brifters and deruailuer. Missing one par from seat post but otherwise a rider.

For a hybrid you can usually pick up a VERY nice relatively new one for under $200 used. They have crappy resale unless it is something like a Cannondale Badboy. Older ridged (no suspension) mountains were based on touring bike geometry. You can ofter pick them up for around $100, throw a set of slicks on it and bee good to go. Ols Specialized Stump jumpers are good to look for.
Look in the commuter bike pic thread for ideas of what you can do.

Despite the front suspension this would be a good start and you could probably get it for around $110.
http://vancouver.en.craigslist.ca/va...124952816.html

This is the perfect bike to make a commuter but I think it will be a little tall for you.
If you can flat foot this bike I'd snatch it up.
http://vancouver.en.craigslist.ca/rd...124687293.html Those bull bars are making a come back are worth $30-40 these days. Already has decent road tires. It needs nothing but a rack and fenders and it would be good to go.