Allan- where can I buy a new D-28 for $600?? I'm assuming you mean a Martin D-28 here. The ones I've seen are quite a bit more than that.
For the original poster- like mentioned it's pretty easy to get a decent-sounding acoustic in the 200-500 dollar range. I'd stay away from any of the $99 ones, for the reasons already mentioned.
I took lessons when I was young, but kinda gave it up until about 10 years ago. What helped me the most was that these days there are lots of websites that have most any song you can think of listed along with the chords to play including modern ones that your daughter's favorite artist may perform. Once I learned how to play the different chords, I was able to go online and find some favorite songs that I already knew how they were "supposed" to sound, and was able to, slowly at first, play them, and improvement came fairly fast after that.
Along with an easy-to-play guitar that will stay in tune, being able to practice on songs that a person already knows and enjoys is alot better motivation than some being forced to practice unfamilar random songs in your average "beginners guitar songbook".
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