Hi Angel_eyes!
I have been following your string for a while, but have not posted, because I am just a newbie to these forums and biking myself.
Isn't it amazing how these bikers support each other? I can see that you have gotten a lot of really good advice. Being new to cycling, it has really been a big help for me getting questions answered, and the encouragement that I have gotten has helped me do things that I didn't think I could do!
As far as a bike goes, I would think that a hybrid or cross trainer would work well for you. It will have a heavier frame and thicker tires than a road bike, but still give you better road performance than a mountain bike.
Over and over you have been advised to get a bike that fits you, and I agree with this. Patty at my LBS won't let me off her lot untill she has everything adjusted, and I have never experienced any sore knees or other problems associated with poor fit. Except for the swap meet, no one has mentioned used bikes. I now own two bikes, a hybrid and a road bike, and they are both used. They have allowed me to get into cycling at a very reasonable cost (well within your previously mentioned limits) and have proven to be very good values. My advice to you is to get to know the people at the local bike shop (LBS.) Once they know what you need, maybe if you can't swing a new bike, they will have a good used one that will get you on the road. Patty went through both of my bikes before I got them, and they are in perfect shape. I have put on over 500 miles between the two of them, and never had a seconds trouble with them!
Best of luck to you and your daughter!