What do i do now?

If your computer has USB (or better yet Firewire/IEEE1394) inputs, you can get a decent audio-digital converter from M-Audio which has 2 inputs, phantom power (for good condenser mics - which can be had for about $100), and MIDI I/O. A quick installation of drivers for the new device, and a decent microphone, and a MIDI and audio cable for the keyword.

 check out www.m-audio.com for equipment. here's what I recommend:

Audio Input/Output 

http://www.m-audio.com/products/en_us/MobilePreUSB-main.html 

 MiDI I/O

http://www.m-audio.com/products/en_us/MIDISPORT2x2-main.html

Speakers

http://www.m-audio.com/products/en_us/StudiophileAV40-main.html

Mic

http://www.behringer.com/C-1/index.cfm?lang=ENG 

this is probably less than $350 and will give you a decent set of tools to make good recordings with. 

There are also a lot of free plugin tools for ACID which will help you - drum boxes, samples, synthesizers, etc. www.kvr-audio.com