I was looking at cheap electric sitars a year or so ago (around the £300-£400 mark), but they seem to have disappeared... One was a Hohner, I think...
And you can get sitar bridges like Wez suggests that directly replace the bridges on current Dano guitars (I considered getting another 59 and a bridge for it - in fact, I hardly play my 59 at the moment, maybe I should do it to that?).
DnL is right about the sympathetic strings bit - but I find I personally don't really want them if I try to use a sitar sound in a rock/pop situation.
Another option to consider is a Line6 Variax - I think the sitar model is pretty good, if I remember rightly it features in a song called "Standing Sideways" if you follow the link in my sig (I'm at work and can't access soundclick to check).
Warning though: a Variax shows you what the world might be like if you owned all the guitars it's modelling - can prove a bit expensive eventually :lol: (Also, they seem to have reliability issues - although my 2, and a bass, have been fine so far...)