Hi C.,
I employed too many nannies in my kids' lives, so here are my pears of wisdom.
First, I want to tell you not to pay attention to any experience/reference and such. They do not matter. Look at the person, ask questions at the interview and pay attention how she responds to you and the kids. Do you like her? Does your child? That's it.
Some of the best nannies I had working for me were not experienced at all. You can train them to your liking. The experienced ones know all the shortcuts, expect a lot, and will judge you/your kids based on their previous experiences with employers.
If you have time I recomend you post an add in a newspapers used by immigrants (polish, chineese, spanish, indian, you can add a few more). Their English could be limited by they will be willing to work for much less with a lot more quality. Immigrants tend to be hard working and honest. Plus your child can learn a second language and nanny's English will improve as she will learn from all the kids books/movies. I had some working for $5-9/hour or $300 weekly if they are come and go. Live in you can pay $1300-$1800/month.
Another advise, do not spoil your nanny. Do not give her meal money, gas cards, other freebies. Ask for more, add less privileges. Have her cook, do lundry, clean, whatever your needs are. What is she going to do while your baby sleeps, watch TV, and you are paying her? Ask for receipts if you send her shopping. Check on her when she is not expecting it. Hide in bushes :) near playground and see how she is with your child. Plan her day for her. You should know what she is doing for the day, where is the free time, fill it with chores. Make lists and tell her specificaly what you need. I tend to write/tell my nanny a day plan every day. Then you ask what she accomplished. You can relax a bit when you are confident that she is a good person and takes reasonably good care of your child.
Many mothers kid themselves thinking that nanny will love their kids like they do. What a BS! It is a job for her. In the best scenario you will get someone responsible and nice enough to like your kid, not love them. The worst - you see them around a lot: kid strapped in the stroller, yelling while she is yapping on the phone; or the ones telling kids to sit all the time because she is lazy to run with them; kids eating their boogers- nanny cannot be bothered to wipe them; or sometimes I see many of them just spaced out, like they are not there with the kids but in some far away land inside their head.
Look for a young, energetic, pleasant, quick to smile.
Good luck!