Hakone ryokan

Your question led me to look up where I stayed over 10 years ago. It was Yudokoro Choraku. It was not one of the fancier pampering Ryokens with meals served if that is what you are looking for. It was very reasonably priced, onsen in the building, we had several rooms and a porch for 2 people, not bad for sleeping on a futon for a couple nights, and I really liked the location. It was just a few steps from the Hakone Open Air museum (wonderful sculpture park plus indoor art museum). As I remember, it was a convenient walk in one direction to a bus stop and in the other direction to a train station so it was easy to get to other Hakone towns and sights. Although not really in a town, as I remember, there were restaurants we enjoyed within walking distance. Of course you should check out more up to date reviews.

It really depends on your budget and your requirements (in-room onsen, family room, architectural style and ambience, ...etc). There are some very fancy ones charging more than $1k per night.

Doing as you describe, I had a lovely stay at Ashonoko Hanaori in April. They have a shuttle that picks up and drops off at Odawara Station (takes about an hour). It is on Lake Ashoka, right beside the Togendai cable car station up the mountain. Amazing buffet meals.