*Classical guitarist chiming in*
I think you first have to decide what you're going to use it for. If it's just for strumming or flatpicking, you probably could get away with an ovation, or whatever else floats your boat when you play it. The pickup on the ovation will come in handy.
Now if you want a classical for fingerstyle and "classical" playing, I would suggest a Takamine, Cordoba, or even one of the Yamahas that have a glossy finish (not the cheap matte finished ones!) in your price range. There are also a lot of Spanish-made brands that are more obscure, such as Raimundo, Amalio Burguet, Almansa, or maybe even a used Ramirez student model (which is the kind of the Gibson of the classical guitar world). You can find a solid-topped guitar very easily for $500, but solid sides and back will be harder. If you want to go this route, I would try to find a store that specializes in classical guitar, and go and try out as many guitars as they have in your range. The Spanish makers are very inconsistent from guitar to guitar, so always try before you buy.
One more thing: I usually buy $125 Montana CL80 guitars (I think that company is a Kaman affiliate) for my school, and a private school down my street bought similarly-priced Arias, and they were both fine for their purposes. I still love my first Aria classical guitar, which was probably all of $75 when my dad bought it in the late 70's/early 80's. A lot of cheaper models can do pretty well if they are properly set up. The big quality leap is when you go to all solid-wood factory guitars, and then the leap after that is to hand-made guitars from one-man shops.
Hope this helps, Mrid.