The biggest thing is play as many guitars as you can before buying in order to help find the right one. I love Martin 000 guitars. They are really comfortable and they have a pleasing tone. For sitting around casually playing on the sofa, they are about my favorite. If you want a Martin 000 in the price range you are looking for, you might try to find a 000-1 on the used market. I see them from time to time for around $500 in good shape. They are all solid woods except for the sides (which are laminated). I bought one for my mother in law years ago. When I bought it, I compared it with the standard 000-18 and sound wise, they were pretty close. The biggest difference (other than laminated sides) is the finish is matte instead of polished. My mother in law's has become a really sweet sounding guitar.
As far as a guitar for BG and Folk Jams, if you want to have volume to compete, you might be better served by a larger bodied guitar such as a dreadnaught. There are a bunch of makers now making incredible guitars in your price range. Eastman and Recording King make all solid wood guitars that are available in that range (at least here they are). If I were buying a guitar in that range for that purpose, that's exactly what I would be investigating. The E10Ds are pretty nice (eastmanguitars.com/dreadnought/). Check other forum posts for more options, I feel like I am missing a few. If he doesn't respond here, I'd try to pick drGuitar's brain a bit. He has some really nice value guitars (as well as some nice more expensive types). A Taylor 110 is also a good guitar in that range.
With all that said, it comes down to what works for you. Get something you love and that's the most important thing. The guy or gal that sounds best at a jam is not generally going to be defined by playing the "right" instrument. I've got friends that sound better on a "beginner" guitar than I do playing whatever great thing I might be able to get my hands on.