Sorry about the bike.
As far as a Wal-Mart bike, you'll hate yourself if you go that route. There is a reason they are cheap: Bottom brackets, headsets, wheel bearings, etc, are all garbage. If you ride regularly, you might get a month or two out of these components. I'd suggest a used bike from craigslist.
As far as a steel framed single speed, I've got a late '80's Ritchey that I converted to single speed, and love it. However, I live in the relatively flat Chico, and get my single speed components for free
www.paulcomp.com 
Jim