Have you sewn on a vintage machine before? Or on a newer machine? My inclination would be to fix up the 401 as it is a wonderful classic workhorse that will last forever with reasonable maintenance, then buy a newer machine for your daughter when she is ready.
The thing is, it's like comparing apples and oranges and asking which you should eat. The vintage machines are wonderful, but they do not have current standard features such as needle/down, variable needle positions, etc. A newer machine in the price range you are talking about will have all those features but will not have the workhorse durability and reliability of the vintage machine.
I used to collect vintage Singers (and still have a few!), but I realized over time that the only machine I really wanted to use for serious sewing is my Bernina 1230. This is not the same situation as yours because my Bernina is a top-end machine, still not in your price range even after 15 years of use. The 401 was a top-end machine of its time too.
If I had to choose between quilting on a 401 and quilting on a Janome 2012, I'd probably choose the 401. However, that is really a very personal decision about what "feels" better to you, and what you enjoy using.