Hi coffeenewb and welcome to CS!
Coffee equipment that comes to mind at around the upper limit of your budget might include the Breville Ikon, if you purchase it from a Breville outlet, where you may find a good discount. Couple that with a Sunbeam 0450 Grinder (or 0480 if you can).
Dont think you would have anything left over for some fresh coffee beans though, but perhaps there is someone else you know who might contribute to the gift.
If you can manage this, your parents are likely to swear off instant and enjoy coffee moreso.
Good luck with it!