Springfield is running a promo om the XD/XDM line at the moment.
Springfield Armory® Gear Up Promo Site
That way you diffidently get your moneys worth.
In my oppinion, a used 9mm Glock should be the way to go. The ammo is inexpensive compared to other calibers, the mags are cheap and easy to find, the gun has many safeties (yes, Glock do have many safeties!!), and to dissasemble it and put it back together should be a breeze even for the inexperienced user. Many extras are widely available. On top of it all, the prize of a used 9mm Glock could be quite low, if you take into acount its sheer quality and reliability, and its resale price.
A "J" frame Smith & Wesson might be a good choice for your friend. I see new ones on sale in your price range and they're easily concealable, simple to learn, very dependable, and a .38spl packs a pretty decent punch.
Also, OP, if you have never taught anyone, be prepared to learn some things.
Tip, watch his body more than his shots. Make sure he doesn't flinch, that's usually the hardest thing to overcome, was for me at least.
Non issue when I said 9mm.Once the gun itself is purchased, it doesn't matter if it shoots the most expensive ammo out there.