Up to a certain point. If you place it too close to the soundhole you'll get alot of low end boom that will be hard to roll off. A good place to start is with the mic pointed at the 14th fret and slightly angled toward the soundhole. If you raise it up slightly and have it closer to the low end strings you'll get a bigger fatter sound. If you lower it slightly and have it closer to the high end strings you'll get a thinner but brighter sound. It all depends on what sounds good to you so play around with it and see what you come up with. Good Luck
Although you can get usable results with a dynamic microphone (especially on solo guitar, or picked patterns), a condenser is usually the better choise as far as accoustics are concerned.
You can also try using both of them, with the SM-57 close micing the guitar, and the AKG about a foot away. Should be interesting.
You can get a good condenser for acoustic guitar, the mxl603s for easily less than $100. I have one and it's a great mic for $75 or so. I don't think it can be beat for the price, but I only own it and a Shure BG4.1 that are small condensers, so maybe other people have different ideas.
If you want it to sound good, you need a good mic. There are all sorts of threads here about what's the best mic for under $200, $300, $400, etc. But I don't think you can get the sound you want with a dynamic mic. What kind of guitar do you have?
I think the Arts are good for a budget. I've got the Dual MP and it's not bad. I haven't used the others in that price range for extended periods though.
Even the cheap preamps will help your mikes live up to their potential.
dbx mini-pre $100
ART Tube Pac $200
M-Audio DMP-2 $180
Mindprint Envoice $400
PreSonus MP20 $470....I bought one and like it a lot
Peavey VMP-2 $750
HHB Classic 80 $1200
Vintech 1272 $1300
.......if you buy cheap you will buy twice but there isn't anything wrong with that. You can never have enough pre's.
For Acoustics I am a condensor mic man. Just try two Neumans or alikes (like the new staggs of Behringers) and put them upisde down on eachother.. that works great for me.
what I consider a decent preamp would be a list similar to Wide Awakes....the one I would recommend is the one that will react with the mics he'll be using, his guitar, and the room in a way that gets the sound he is after....