If you have some mechanical ability, I'd go with the Old Steel. Find one with 27" wheels that you can swap with solid 700 wheels to get even more clearance.

The costliest thing ought to be the wheelset, but a good set is a good investment.

There's a Raleigh in my basement I picked up for 10.00 at a garage sale. I made up a list to make a good commuter bike. Goes like this:

fenders, SKS or ESKGE 40.00
new cables: 20.00
new kool-stop pads: 12.00
planet bike rack: 30.00
tires, Vittoria 35c: 40.00
chain: 20.00
wheels: there's better deals out there, but for 305.00 from peterwhite you can get LX hubs with 36H Mavic 719s,bombproof wheels for loaded touring/commuting.
I think Performance has 105 hubs with Mavic MA3s for like two hundred.

Cogset: 13-32 from Sheldon Brown for 60.00

you might want to get a good sealed headset and bottom bracket too., but price so far is about five hundred and that includes accessories you'd otherwise have to buy!

Personally, I wanted to put moustache bars on this steed which is another 70.00 plus bar end shifters, which are 60.00 for shimano (I have some old suntours) and 70.00 for the Brooks B.17.

So, you can save quite a bit of money and end up with a bike that has really awesome parts. Good luck.