Hi, living in Missoula is pretty easy. You can get from campus to the other side of town in 15 minutes maximum when traffic is 'bad'. (Having grown up in the Seattle Area, what they call congestion here is a bit funny.) Usually, you can get to where you want to be in 10 minutes or less. Although be prepared to be confused by the streets in Missoula, they seem like they should be really easy to navigate but somehow they are confusing as all get out... So distance probably wont be too much of an issue, Lolo, MT is about 15-20 minutes south of town and you can get more house or apartment for the monthly rent, but there is a small commute.
If you aren't planning on bringing your car though, take a look at -
http://www.mountainline.com/ - the local transit website. University students ride for free and the buses can handle bikes. Try to find an apartment on a route that leads to the university and look at the schedule to see if you think the times will work for you. (The bus system here is somewhat lacking in terms of hours, but it gets the job done.)
Or you can bike everywhere, it's a bike friendly town. With a large network of trails and bike lanes that lead to campus. See an interactive map here:
http://www.arcgis.com/explorer/?open=98ea6842816b487d9fa1c28ea8f1fdbf
Just remember that the closer you get to campus, the more expensive rent will be. I pay $400/mo to live ~18 blocks away. Finally, start to look early to mid summer. It gets hard to find a place the closer August gets. Finally, I've never lived in UM dorms or any of their housing, so I can't answer much about that! Oh gosh, just let me know if you have anything else to ask! Enjoy your weekend!
Resources:
http://www.ci.missoula.mt.us/ - City Website
www.co.missoula.mt.us - County Website
