I'm recording some stuff through Acoustica Mixcraft 4, which may not be great software to record through (I honestly don't know, I haven't recorded before) but I work with what I have.

My problem is this: while recording through amp settings, anything I palm mute comes out very staticy or washed out. Any suggestions on how to fix this.
Simple. Don't use the programs to make your guitar sound good. No program will do that for you. I recommend connecting your amp's line-out or recording or headphones jack into where ever you are recording into. It won't sound the same as mic'ing an amp, but it will sound much better. I use Mixcraft and Garageband, so I guess know enough to say that computer sounds do not cut it.
Jackson RR5 ivory w/ EMG 81/85
Jackson DX6 w/ SD Distortion & Dimarzio Super Distortion
Fender Starcaster Sunburst
Mesa/Boogie DC-3
Johnson JT50 Mirage
Ibanez TS-9
Morley Bad Horsie 2
Boss CE-5

ISP Decimator
Boss DD-6
Korg Pitchblack
I'm not using anything but my amp, plugged straight into the computer as you described. All I'm doing is recording it straight through mixcraft, my problem is the palm muted notes are coming out sounding like static. Have you ever encountered this problem, and if so, how did you fix it?