If you're going to be using flat pedals, you can wear any shoes you like. If you want something stiffer, you can get yourself a pair of cycling shoes (MTB shoes with the recessed cleats), and leave the rubber part of the sole that covers the dip for the cleat in place. I like the look of the Keen Commuter sandals for summer too.

Exactly what's the trouble with the nose of your saddle? That makes me think that you need a new saddle, especially if there's chafing or numbness involved. Some light (make yourself some coffee!) reading: http://forums.teamestrogen.com/showthread.php?t=39475
Shorts, like saddles, are very individual. There's a rule of thumb that you should expect to pay a dollar per mile you intend to ride. You don't want to cheap out on shorts. I like Sugoi's Evolution shorts (though mine are 3 years old and the shorts have since changed) and Primal Wear's Prima shorts. The boyfriend's mom swears by her Pearl Izumi Attack shorts. It's quite individual. Go to a bike shop and see what you can try on.

By the way, I never use chamois cream, so it's possible to be comfortable without it, but that's individual, just like shorts and saddles. And yes, you should be able to get at least a pair of shorts and a pair of mountain bike shoes for less than $300.