I think the flea market guitar will turn people away before they even have a chance to consider the instrument
high inplayable action and poor intonation dont exactly make playing enjoyable

play guitar hero

hahaaha

From personal experience, 2 close friends of mine picked up 2 rather nice acoustics, 1 being a Fender actually, the other I don't remember. 1 Decided to stay with guitar and went on to buy an electric, and the other hasn't done much with it so he's happy he didn't go out and spend 100+ dollars.

finding a fender for under $100 at a flea market = winning the lottery.

agreed with mr. dave

For a beginner i'd go with a Fender Strat. Easy strings to play with. Cheap (along the lines of electric guitars). And if you decide that it's not really your thing, it's cool to have a Strat around just for screwing around.

Go to your local music shop play a hole bunch of low end guitars $150-$300 and go with the one that feels best to you.

good advice^