So, I've been getting into recording recently. My current rig is really ghetto and sounds awful. I want to get something inexpensive (don't want to spend more than about $2-300, less is better) that sounds passable.

Here's what I do currently: Play my guitar or bass through my bass amp, using my bass multieffects pedal to add desired effects. This is recorded using a Rock Band USB microphone to Audacity. I then export the tracks, and mix them in Mixcraft.

I was at Sam Ash the other day, talking to one of the employees about audio interfaces. He recommended the Pod Studio GX, which seems to suit my needs. My one hang up is that I have a really cheap guitar that gives a pretty muddy tone. I primarily play metal, and it really loses what clarity is has when it's distorted. So, what I'm wondering, can Pod Farm make my bad guitar sound good, or am I going to have to bite the bullet and buy a better guitar if I want better sound?
Schecter Hellraiser V1 / Schecter Stiletto Extreme 4 / Gallien Krueger 400RB / Hartke Transporter 4x10 / Digitech BP200 / Pod Studio GX
Pod Farm is a good amp modeler and it has a lot of variety to chose from, but if your guitar is crap then your guitar is simply crap you may try better pickups, I know GFS makes good bang for the buck pups
if you can spend $2-300, then the studio gx isnt your best option. at least get something with an xlr input in case you want to use a mic later. something like the m-audio fast track mk II is a good, fairly cheap option. if you want to spend more to get something with more inputs, thats possible too. you might not want them now, but you might in the future.

fast track pro or focusrite saffire 6 are my recomendations in the $200 range.