You are asking to do lettering, applique (which is called "in the hoop" projects) and "pretty" pictures. Yep, pretty much what you use embroidery machines for, also "quilting" if you so desire. Keep reading this forum, "search " for info. Read mfgr. Websites. Visit machine dealers. There is a learning curve to accomplish these tasks. Questions about types of stabilizers, threads, software, etc abound. You will want USB sticks. Not compact flash cards. (My Janome 9700 uses the compact flash....) look at the screens . The newer ones are really nice.
IMHO...you should aim to spend more $$$ than $500. In that range you will be limited to the smallest hoops. 4" X 4" as an example. That is very limiting in size esp. for quilt labels . You will soon be frustrated as you gain experience. Perhaps $1,000 range will get you the small and next size hoop. I have janome 9900. (Replaces my 9700....which I still have but "retired) I love this machine and it is not the top of the line. It is mid range.
Check the Brother machines for lower pricing options. Talk to the dealers. Don't rush into a decision. You have some homework to do first. Be patient. Read read read.
sandy