Does anyone know if Audacity or any free recording software can record with 2 mics (one instrument and one vocal)?

If so, could someone please let me know how to do this?

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audacity should be able to do it i think...
but don't quote me on it.

I know sonar will do it.

you will need an interface with two inputs that will record at once and keep the two inputs separate.
You need to run it through a mixing board first. They go for a lot $. Just record the two tracks separately. It sucks, i know.
Actually thats the only way i know of. there may be others.
As far as I was concerned , you could do it with more or less any DAW. If not, then that particular piece of software is pathetic.
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I'm pretty sure you just need to spend about $60 (the cheapest i have seen them for) on a port for more than 1 microphone line in plug. they either plug into a USB port or you computers microphone port and are like a USB hub but with 16th inch iimputs for mcrophiones then I think you can just click record and it takes the signals from both into one track!
If you buy like an inexpensive ($100) tube microphone preamp, this also allows you to control the phase of each mic. Adusting each mic's phase relationship to each other has been hailed as one of the best "pro" techniques for achieving more organically "EQ'ed" miked-cabinet recordings. This, according to a recent Sound on Sound article on guitar cabinet-miking techniques included the shared opinions of leading recording engineers and producers, who were referenced in the article.
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