How tall is she? If she's not too tall one of the old school mountain bikes with a nice frame and set up suitably may work.

I think you're on the right track but you'll need to up the budget by a lot if you want new.

Or the Windsor Tourist already set up for $600?
http://www.bikesdirect.com/products/windsor/tourist.htm

Still needs fenders if you're in a wet area mind you.....