If he has an Xbox then there's no need for a gaming laptop. A good gaming oriented laptop will easily cost quite a bit more than your budget and wont exactly be... portable.
I advise something like an Ultrabook. Small, light and will be pretty fast due to its SSD storage. Its gaming and processing grunt wont be that spectacular, but for school work and internet browsing that's fine.
In my opinion I think that any laptop is useful for school, as a gaming computer can do anything. But I have not seen an ultrabook with dedicated graphics before so I cant exactly recommend that for gaming. With a budget of $700 I don't think that you will really be able to buy any laptop that uses dedicated graphics so I think you should either: Increase your budget, or get this laptop for your son for school purposes only.