I've recorded one track at a time on my Pentium II 233 MHZ pc using windows 98SE, 319 MB RAM, the cheap microphone that came with my PC, and free software (freeware) developed by a group of people called "sourceforge.net". These guys are from all over the world, and collaborate on these programs for the fun and challenge of it I guess. The program is called "audacity", has alot of the same features as programs you pay tons of money for. It includes plug-ins, or effects you can use to modify the sound, including things like chorus, reverb, phaser, etc,.. the plug-ins are known as VSTs; you add them to the main program by simply dragging the VST file in the correct folder, the program recognizes it and adds the effect to the menu. Theres links to sites with free VST fileson the Audacity site. Simple stuff even for a computer novice like me.

So heres just an example of how I've used this software: I recorded a track on my acoustic guitar. Then put on some head phones, and recorded another track on my electric, while I listened to the first acoustic track. You can record multiple tracks simultaneously, but I only have 1 input, that is- my cheap PC mic.

Then, you can edit. The program shows you the graphic representation of the track, a sine wave, on screen, you can expand the time line out to see more detail,(a zoom in of sorts,) or see the whole track on the screen at one time. Theres tools to copy, cut, paste, tools that make the paste seamless, meaning no strange sounds - by letting the program only copy and paste at zero points- where the sound wave crosses the zero axis line, (the wave crosses  "zero" thousands of times a second !!). You can slow or speed up the beat without changing the pitch, now thats cool! You can normalize the volume, or increase the dynamics ( adjust how loud or quiet it gets during quiet passages & loud sections). Theres filters you can apply to remove the pops or hiss, if you want to record old vinyl albums.

Back to my guitar tracks; I edited a part where I screwed up a repetitive section on my acoustic guitar, so I copied the repetitive  (4 bar) section , and pasted it seamlessly over the part I goofed up. Since I can't seem to get thru the song without making some sort of mistake, I can produce a clean version with alittle cheating or help from this software, LOL.

The limitations are really more a factor of your PC, as far as number of tracks,( processor speed, HD speed, RAM) simultaneous inputs of multiple sources, like mics, etc,...

In summary, for just hacking on my guitars as a hobby, you can't beat free software.