frntrnge- hey welcome to the forum. Having some buddies that already fly fish is a big advantage-- they'll be a big help to get you up to speed.
The good news is that there are bunch of great stuff out there that won't break the bank. And being in Colorado you are blessed with some great fly shops--- if i were you I'd try and take advantage of that and look for a fly shop that can set you up with a moderately priced outfit in your price range. Their prices for comparable brands and models will be the same as Cabelas or LL Bean,
Though a local shop may not have the range of products as a major on-line outfit, (different brands and models of gear), a fly shop will generally have some decent stuff at entry level price points with rods by companies like Redington, Echo, TFO, St Croix etc. Many times the fly shop will throw in a few freebie casting lessons, help you rig up etc, and will also be your "go to" place for advice on local fishing and techniques. If you have a good local shop near you it'll be worth its weight in gold to you as you are starting out, and well worth supporting.
And Larry's suggestion about joining a local chapter of Trout Unlimited (TU) is an excellent one, and the Federation of Fly Fishers (FFF) has affiliated clubs across the country. These chapters/clubs have informative meetings, group trips to local waters, casting clinics and tying classes etc. You have a couple in your area.
You can do a search for TU chapters here:
Council/Chapter Contacts | Trout Unlimited - Conserving coldwater fisheries
And FFF affiliated clubs here:
Locate a Club
and these folks are definitely worth checking out:
Pikes Peak Flyfishers | Home Page
You can do a search here: