First up is a caution, does your friend have a valid passport or enhanced drivers license (acceptable for land crossing). The days of easy passage between our countries is long past and proper documents are required.
Montreal is a large cosmopolitan city with tons to do. Depending on tastes there are museums and galleries, amusement parks (La Ronde), casino, music festivals (Osheaga coming up, Montreal Jazz has incredible lineups), street performances, markets, professional sports, and some of North America's oldest history. Oh, and don't forget the food; some of the best restaurants on the continent in all categories from Dives to Triple Diamonds. I would check with on one of the several Montreal Tourism sites and see what aligns with your dates and with what your travelling companions like to do.
We do occasional weekend getaways to Montreal (it's also 2 hours away from us.) DW likes to book boutiquey hotels, and generally different ones each time. We like to stay deep in the core nearish to Old Montreal, and she will troll on Tripadvisor and other sites looking for the right spot. These are generally well within your budget, but are generally in older buildings with limited facilities (last one was a 3rd floor walkup loft room; cute, comfortable, but basic). All the major chains have hotels in the downtown area as well, the luxury ones will probably be beyond what you want to pay, depending on what events are in town.
