If all they did is a diagnostic check (OBDII) they lied about diagnosis and were guessing. A cat will never show up in the computer and the only way to check it is to check exhaust pressure through the O2 sensor bung before the cat.

Anyway, $200 max for a stock cat and installation. $700 is pure ripoff. Don't go back to that shop for future diagnosis or anything, they're just after money.