http://charlotte.craigslist.org/pho/3421122570.html
Finding more on Craigslist than I thought I would. Above is one...so maybe my budget isn't as limiting as I thought.
Thank for you for the great advice!
The Nikon D40 was just one example when I browsed eBay. I'd actually vote for the camera I just upgraded from, the Sony Alpha line. Specifically, the A100, A200, and A300 can each be found around your price range. They each have 10+ megapixels, which is really the point where you don't need any more. They also have in-camera image stabilization, meaning you can get some surprisingly good results with cheap used 20-year-old Minolta lenses. (A nice advantage if she wants to add lenses as her interest grows )