As Chris said, don't give up Luther. I found two very nice instruments on Wayne's list at good prices (I have an instrument on order from Dan Larson). But before I found those instruments, I did a lot of practicing on a guitar using lute technique as best I could from some investigation. Put on a light set of strings and give it a try. I didn't use a capo, but you could to shorten the string length and bring the pitch up g'. This would at least get you going in a lute direction until you find an affordable instrument.
Ned -- To get on or off this list see list information at http://www.cs.dartmouth.edu/~wbc/lute-admin/index.html
