I grew up in Montana. My parents had five kids, and 20 acres of land. They did it all on one income. I feel I know the state pretty well.
If you have kids you don't want to be totally isolated. You need the availability of schools, jobs as they become teens, extra-curricular activities, etc.
I recommend either Lolo, Florence or Stevensville. All three are in the Bitteroot Valley on the Western side of the state. I lived in Florence so I'm naturally biased to that location

. The Bitteroot is an absolutely stunning little valley between the Rocky and Sapphire mountain ranges. The Bitteroot River runs down the valley. Its perfect for fishing and family canoe/raft trips as it is very shallow and fairly slow moving in the summer.
Lolo, Florence and Stevi are located close enough to Missoula so as not to be too isolated. Lolo about 15 minutes away, Florence 20 - 25 minutes and Stevi pushing about 40 minutes. Missoula is (in my opinion) a very ugly town. But it has several Highschools, a couple private schools, a university, a fairly big mall and basically anything you could want. Its not a big city, but it does its job. I wouldn't live in Missoula though.
Florence is very picturesque and has a good school system, but if you live in Lolo you are eligible to chose from several of the schools in Missoula itself. It also has an EXCELLENT medical clinic (Lolo Family Practice) with a stellar group of doctors and nurses. Lolo and Florence are about 10 minutes apart so have a look, weigh the options, and take your pick. But if I had kids, I'd try to stay near Lolo (even though Florence is more picturesque).
If your kids are in High School, Big Sky Highschool in Missoula has a lot of good qualities. I didn't go there myself but I hear a lot of good things about it. It has an excellent music program. Its easily accessible from Lolo.
Weather is wonderful in the Bitteroot. The summers are hot, but its a dry heat and the climate and elevation are such that when the sun goes down at night, even if it was 100 degrees during the day, it will drop down to 40. Trust me. Don't let the heat scare you. The cool summer evenings are remarkable, especially as the sun sets over the Rockies.
Fall and spring are lovely. Not too hot and hot too cold. Winter is VERY cold. There is typically not a lot of snow, but you will get a few feet. Just enough to play in, not too much so as to cramp your style. You get a lot more snow in the higher elevations. Highway 93 (the main highway you'll be using) is usually plowed quickly and safe to drive on in the winter. Its the smaller dirt roads you have to worry about. When picking a house, be very mindful that the cute little dirt road you drove up on is the same one you have to slide DOWN on in the winter. The road you live on will impact your quality of life.
If you want horses and animals, Lolo/Florence is a great place to get a few acres. A lot of kids are involved in 4-H (a local agricultural club for kids). Your kid can actually pick up a few hundred bucks by raising and selling a lamb through 4-H. Its a good experience.
One word of warning. In Montana we say "This is a great place to be born, and a great place to die, but there's not much to do in between." It is a wonderful place to raise your children. Truly wonderful. But you'll notice when kids graduate from Highschool, people don't ask "What are you DOING after graduation?" they ask "Where are you GOING after graduation?" The vast majority of kids do NOT stay in Montana. It is just not a sensible place to get a career going the majority of the time. You will have to be prepared to part with your children during their adult lives. Note that I now live in Toronto.
I hope this helps. I'm happy to answer any more questions you have as best I can. Good luck!
