i see two options for you:

1. look on craiglist (or elsewhere) for a conversion. i got an old fuji for $180 about a year ago and it's been great. i'm just now starting to take longer rides and wanting something nicer - i'm trying to decide whether to upgrade the drivetrain on my current bike or start fresh with a new bike. changing out the parts sounds fun and i'd like to learn, but i'm hesitant to take it apart and put money into it when it's working fine as is. i'll probably end up holding onto it as a beater and saving up for a new bike.

2. up your budget a bit and get a low-end real bike. i'm trying to decide between the mercier kilo tt for $350, or an IRO bike for ~600. i'm leaning towards the IRO, because it seems like a solid bike that i will be happy with for a long time. but if you're goal is to get up and running, the mercier sounds perfect. read throuhg the long thread about them, it's been active lately.

good luck, and have fun!

edit: just reread your post and saw you are already looking at the kilo. i'd say go for it, it sounds like a killer deal for $350. i don't think you're going to do much better - just make sure you do some research and get the right size.