My 2 cents worth... if you don't have a decent set of mics, get a decent set of mics, because that's where the majority of your sound quality is determined. It's natural to focus on the recorder because that is what the touch and handle, but the mics are where the sound gets captured.
R09HR is a good recorder, but that eats up at least half your budget, and the temptation is to to skimp on mics after that, just make sure you don't skimp on mics. A friend of mine has been making great tapes with some Church Audio cards, running mic-in to the R09HR. If you get CA-11 mics with cardioid and omni caps, and an R09HR you should be within your budget. That combo seems to have decent synergy.
But, don't be afraid to blow your whole budget on good mics (like DPA4061) and run that into your minidisc. The minidisc may be old technology, but it's not junk. Some of them have very good preamps, and it's better to have clear music at 16bit, than crappy noise at 24 bit.