Cyclo Urbana is way better than Cyclo Champaign. ;)
A lot depends on how and where you'll be cycling, and how experienced you are. The bike you have, as far as I can tell from the photo, is set up for actual road/race/triathlon action. For numerous reasons, I wouldn't be using it as a year-round commuter. I'm not saying that someone could not, but I personally wouldn't recommend it. There are a lot of pretty beat-up streets in the Chicago area. I've tried riding them on a bike with 25s and ended up dismounted one way or another more than I thought was good for me. Especially if you haven't ridden in urban areas much, I'd go with a tire in the 32 to 38 width range. You can withstand some road debris, small potholes, and generally deteriorated conditions with tires like those, and they're also quite comfortable. The speed hit is there, but it's not that extreme. I'd also consider going with flat handlebars. A more upright posture will make it easier to keep your eyes on all the action around you, which I consider crucial. I do not like drop bars on the streets of Chicago. But that's just me, and I'm sure others do just fine by them everywhere.
A cyclocross bike is going to be heavier than a road bike, even an excellent one like the Crosscheck recommended by Duppie. A cross or hybrid bike will often have fenders and other items that are useful for commuting, but do add a few pounds. More important than weight is the stability, durability, and comfort level of the bike. When you're riding in the city, going fast isn't generally the main objective. Survival is what you want to be about. Don't obsess over the weight of any bike, especially a commuter.
If you can find a Crosscheck or the equivalent in your price range on Craigslist, that would be great. Try local eBay listings, too. Just make darn sure that whatever you buy fits correctly from the get-go. If you buy a bike that doesn't fit, you'll regret it and you won't have nearly as much fun. I'd recommend that you also keep an eye out for recent or vintage Trek hybrids. The old 7000 series -- say the 7300, 7500, 7600, 7700, or 7900, would be well in your range and worth a look. Look for the FX models of the 7000 series if you want the lightest versions or hate suspensions. Also, the Multitrack series -- say from 720 through the 750 -- are nice steel bikes that will last forever if you take care of them. More recently, Trek had an entire series called the FXs, which would cost a bit more. You could buy any of the older models and have enough left in your budget for some tweaking, like bike racks and such.
I myself ride a 1996 Trek 730 and a 2000 Trek 7600 all over the city, all year round. They have never let me down.
P.S. Many would say they're dorky, but one way or another, put a mirror on whatever bike you find. And don't forget some good lights.
I checked Chicago Craigslist and, by coincidence, there are perfect examples of a Trek 7500 and a Trek 750 on there right now. You might want to take a look just to see what they're like.
I used to commute year-round on a Trek 750 Multitrack. I loved that bike so much! Pretty speedy, too, especially if you put slightly thinner tires on it.
Where are you going to be storing your bike while you're at work? Will it be outside, or in a secure place indoors? That would make a big difference to me. You will notice that most commuter bikes that are stored outside during the day are not the nicest looking. There's a reason for that. If I had to store my bike outside, I would not ride the one I currently do. I'd go to Working Bikes and pick out a good used one that can take the streets and wouldn't put me way back if it was stolen.
I would be concerned about buying a bike form craigslist. There are plenty of used bikes available from bike shops. Another good source for used bikes are bike rental companies like bikeandroll (located at mcdonald's cycle center) and bobby's bike hike. They sell bikes b/c they want to have newish bike to rent so they sell bikes just because they have aged, not because there is something wrong with them.
The recyclery in Rogers Park is a good place to get an inexpensive bike. They take donated bikes and fix them up.
As for what to get it depends on how you will use it. If you plan to commute to work, then you probably want a rack to carry stuff. Also a bike that has you sitting upright is good for riding in the streets b/c it is easier to look around. You sacrifice some speed with this, but that is not so important for commuting.
Internal hub gears are lower maintenance, but cost more.
Amen +1 on a rack and an upright riding position. Not just easier to look around, but you are also more visible and therefore more safe.
But I disagree on the craigslist concern. You are not gonna find any sweet 90's cro-moly hybrid frames in last year's fleet from bike and roll or bobby's, and I suspect that they are too hard to sell for most thieves to bother with.
And if you want to convert that old thing to an internal hub or a fixie, you are probably not gonna find a horizontal drop-out on a last year's rental bike either.
I assume your concern on Craigslist is based on the bike maybe being stolen, and I think you can help mitigate that risk by trusting your smell test and keeping a few tips in mind when checking out ads. If the deal seems too good to be true, or the seller seems off, trust it as a red flag.
Bike Index put out a pretty good article regarding how to spot shady ads that's worth a read: https://files.bikeindex.org/stored/dont_buy_stolen.pdf.