After two extended trips to Albuquerque, I can unequivocally say that the best traditional New Mexican cooking I tried was at Mary's & Tito's Cafe. Everything about the place fairly shouts "grandma", from the old-style southwest diner decor to, most importantly, the cooking.
No surprises on the menu... it's typical enchilada/burrito/taco/tamale fare, but everything is prepared carefully and--dare I say it?--lovingly. Everything on the combination plate I ordered was fantastic: a beef taco, a cheese enchilada, and the most perfectly-fried chile relleno I've ever had, surrounded by superb red chile. (The local joke--Q. "What's New Mexico's state question? A. Red or green?"--is answered almost invariably "red" by me.) One can order a side of carne adovada for five bucks, and it's great: lots of carne (pork) seasoned with adovo, almost like a New Mexican pulled pork. So often it's a dish of adovo with little bits of carne swimming in it.
Prices are eminently reasonable... they're downright cheap when you consider that Mary & Tito's was recently awarded the James Beard Foundation's 2010 America's Classics Award. They definitely deserved it!
Mary & Tito's Cafe
2711 4th Street NW
Albuquerque, NM 87107