Part 2 Building your own computer - based recording studio (the software).

There are several producers of audio recording software, each with it's advantages and features.
Yes there is freeware out there some of which is great for beginners who want to record just a couple of tracks (one such product is Audacity) without much in the way of effects and limited editing capabilities.
If you are planning on purchasing a Mac you might want to consider the iLife software package which includes a program called Garage Band.
I have heard good things about this program and that you can get some excellent results with a few tweaks.
Apple also produces Logic and Logic express (the latter being a scaled down version for beginners) which are higher end programs.
Perhaps the two best known programs available on the market today are Cubase and Pro tools which both have a reputation as being professional recording products.
I personally use Cubase and have found it to be an excellent program.

Some companies bundle hardware and software together, so before you plonk down your hard earned cash It's worth doing some research.

Hardware Bundles

Obviously when recording an analog signal from an instrument you need a way of converting this into a form that your computer can work with (a Digital signal).
The item that does this is called a Digital-Analog converter.
Most commonly this is the sound card in your computer which takes your microphone or other input signal you have plugged in and converts it to a digital form.
For basic fun recording this is usually adequate and your sound card will do the job, however for a decent quality recording that you are going to eventually burn to CD and sell you will need a better unit that can convert your signal more accurately.
This can be either a "High end" soundcard that you plug into the motherboard of your computer (these usually use your computer's processor power to run and only have one stereo (left and right) input).
Or you can choose an outboard model which has it's own power supply and is connected to your computer via a usb or firewire cable.
High end soundcards are usually cheaper and are great for beginners on a tight budget while seperate "D-A" converters, having their own case etc can have several inputs/outputs with controls on the front panel and usually are less processor hungry.
I personally began my recording using a high end soundcard and then upgraded to an outboard unit.
My system "heart is a Machintosh G4 and a MOTU 828 D-A converter which is very stable, reliable and produces exceptional quality sound.

In both cases above the companies usually have bundled with their product some recording software.