Avoid chinese restaurants!
There are some bright exceptions, in which you can taste some of the best chinese and cantonese recipes, but in general, chinese restaurants serve the worst quality food available in Madrid.
You may try tapas as MM has very well spend, but there are hundreds of places were you can have dinner for 15 € or even less. I know americans don't like it (becuase it is american food, but understand me, I like it becuase I don't eat it at home) but I like Foster's Hollywood, an american food restaurant (originally founded by two american expatriates in Madrid). I was there yesterday, and I had a quesadilla, and a half pound bacon burger with french fries and salad, and a coke (free refill, which is rare in Spain) and a chocolate cake, for 15 €
I really couldn't enter throught my home door because of all what I ate
But there are other places. The BEST you can do is to stop a local, ask him if he can speak english, and if so, ask him a place in the neighbourhood specifying how much you want to spend. We spaniards really like to go out to have dinner with friends, so the best expert is a local for sure!
Fernando