Just like you, i'm new to recording stuff on the computer and i've posted the sonarcakewalk thread but apparently no one is able to help me out but thats ok, heres what ive found out on my own. Make sure your computer/laptop come equip with a soundcard for it to be able to read the signals that your transmitting via your musical instrument. Without a soundcard you can still record but you wont be able to hear playback. Being able to hear playback is useful in that you can listen to what you've recorded and edit stuff no matter how far you've gone into your music while still in midi/wav format. Midi or wav is the format in which most recording softwares operate with. When your done recording, only then do you convert stuff to mp3s and store it or burn CDs.
Im not going to recommend softwares cuz honestly, i wont know which is better than the other but theres mention of a variety of them in couple threads in here so be sure to check 'em all out. For choices on microphones, evidently an expensive unit generally tend to be better then a less expensive unit but the thing is your going to able to tweek/edit stuff while recording anyway so depending on how much you intend to forkout is entirely up to you. (dont forget the adapter jacks).
Theres also discussions on most softwares not being compatible to windows vista rather than windows XP so you need to figureout what your computer systems hardware can and cannot accept before proceeding.
Thats bout it for now, hope that helped.