For a good quality sound card I bought an M audio audiophile 24/96 card. It was not that expensive (under $200 I think). It is supposed to have an excellent analogue to digital converter. It also allows 24 bit recording up to 96 Khz sampling. THe problem with the higher resolution is that the files are twice as large and if you convert them to MP3 you loose all the benifit anyway. As for software I started out with a copy of Cakewalk. I tend to update every other version. It has now changed names to Sonar and the current version is 4.0. I just got the update and the thing is amazing. I only use 10% (at best) of what it has to offer. I initially went with this because it allowed me to import MIDI files from the net or "Band in the Box" and just play around adding guitar parts. It works great for "net Jams". Just download the mp3 file, convert to .wav and import it into the program. You can then add your own parts, add effects, EQ, mix and then create a .wav or .mp3 file to export. Sonar is an upper end program and is not cheap. Youu can probably get by with much less but I am very happy with mine, especially the new version. You will also need a good mike and likely a mike amplifier/line in device. I use a yamaha pa board I have from my last band. I run the line out from the mixer to the sound card and everything works great. I also run the card output into the pa and out to the pa speakers. Most cards will allow you to plug the mike directly into them but I believe you will get better results with a mike amplifier. Good luck. It is amazing the results you can get, way better than my old 4 track cassette recorder.
Al