Yup, that's pretty much right. Make sure you play some steel strung guitars also, and choose based on which sound you prefer. The steel strings only hurt for a very short time, and are generally more conducive to modern music.
What do you see yourself playing? Style? Artists you'd like to emulate?
Edit:
Just to clarify... A folk guitar will have a thinner neck, and will generally be steel strung. If you go in and ask, tell them you want a nylon strung folk guitar. That way you won't get the wide classical style neck. I forgot to mention also, that the bridge on your Walmart guitar should be able to be glued back on. It's a pretty easy fix if it broke the way I think it did.
1 more thing... Never put steel strings on a guitar built for nylon. It'll warp it to hell, and can pull the guitar apart.