Here's a list of some free multitrack software.
http://www.pcmus.com/Free-Software.htm
Not having used any of these, Kristal looks fairly useful.
If you want to spend a little money later, n-tracks is fully featured shareware for $64 that does nearly as much as $600+ programs.
http://ntrack.com
To get the sound INTO the computer, anything that will get sound into the microphone port will work, but for good sound, you want a separate mixer box of some kind. That way you can plug any kind of microphone or instrument into it (sometimes more than one at the same time) and then send a nice clean signal to the software.
This page has examples (of American brands and prices).
http://www.nextag.com/audio-mixer/search-html
Visit a local music equipment store and ask for their basic mixers, you should be able to get what you need for less than 50 Euros just to start. A decent microphone and a cable for around the same price (really nice ones are over 100 Euros).
Any questions?