Here`s how I do it,
I use adobe audition as my recording/mixing software so if you use audacity you already have that part covered.
As far as hardware goes :
Guitar -> effect processor -> small mixer -> Line in jack of computer
The most important thing in recording to get a good sound is having some sort of pre-amp. Most multi-effect guitar pad has them these days. If you do not have a pre-amp you'll end up with a very harsh sound.
If you use an amp you can either mic it but you'll have to get a mixer to process the sound before sending it to your laptop. Or use the line out port of your amp and send it in the line-in of your laptop.
Never use the mic jack of your sound card to send signal coming from and amp or effect pad always use the line-in.
You could always turn to companies like m-audio that makes usb interfaces for recording. My honest opinion, if you have a effect pad with built-in pre-amp you`re good to go. I`ve been making music for 5-6 years now on my computer using very little hardware. Go with your needs, don`t buy too much gear for the sake of having them :)
Concerning drums, I switched to drum loops now. It saves me the hassle of programming them which can really be a time consuming process.