I'll jump in with equipment help.
The first part of the chain. You can directly connect guitars to the soundcard with cable, but then what you're recording is not what youre hearing, it's what the pickup or the amp inpu is hearing. Even electric guitars sound better when mic'd off the cabs, rather than run the guitar into your effects processor and use the simulator. Acoustics HAVE to be mic'd for good sound. You can probably directly connect keyboards and bass in a home situation, but you need mics.
So, how do you select mics?
Shure makes some pretty decent mics. The SM57 and 58 are a must have for any semi-serious recording attempts. If you can't spend on both, get the 57 first for instruments.
You may not have enough for Shures. I have had excellent luck with some Ahuja mics, as long as I heed the dynamic envelopes. The Electrets are awesome for vocals, and the instrument mics are good for cabs and percussion.
I don't know the model numbers and they aren't online, but a visit to the local PA fellow can help - I built up a try and buy relationship, so if I didn't like a mic I returned it within 24 hours. I'd end up buying on Saturday, so I got the entire weekend. The dynamic mics work better for amped/loud instruments and vocal, and the electrets do better on acoustic instruments.
When selecting mics, a couple of things you should check for:
1. Capsule type: Beginners mics are normally dynamic or electret. Condensor mics are more expensive, and require phantom power. Ribbon mics are very good for vocal, but are very expensive.
Start with one or two dynamic mics ('Karaoke' mics are decent to start with for vocals) and at least one electret (will cost about 2K) for acoustic guitar, if you do voices plus one or two guitars.
2. Polar pattern: Basically relates to the area of sound which the mic can pick up. The variations are Omnidirectional, Cardoid and Unidirectional.
Omnis pick up sound equally from all directions. If you play in a very noisy environment, this may be bad as you will get a lot of ambient sound in the recroding. In a very quiet environment, omnis will capture a lot of ambience and will sound rich and full.
Cardoid pick up sound from only the front and back of the mic in a 'figure-8' pattern, and are what you should be using to get a bit of ambience, and with clever positioning you can reduce unwanted noise pickup. This is specially good for acoustic guitar, when your left hand makes all sorts of unwanted finger noise on the fretboard, or if you're reading lyrics off a sheet that you need to keep turning over.
Unis pick up sound from only the front, and though it may seem ideal for recording, it really is not - as to compress the polar pattern into a straight line a lot of reflectors are needed in front of the capsule, narrowing the frequency response severely. So they have very specialised applications such as vocal mics for large venues, and shotgun mics for ambient sound recordings.