So right now I have audacity and a $40 mic. What would be the best thing to get, an interface, a new mic, new recording software, or what? Will my guitar sound better micced through an amp or through an interface?

Also, when I layer tracks on top of each other in audacity I tend to get jitters/popping noise on my laptop, but my desktop at home records just fine. My laptop is much newer with better hardware, but the hard drive spins at 5400 rpm, and I am guessing the desktop spins at 7200, is this the problem or not?
Standard Fender Telecaster
Fender Blues Jr
I would say get an interface, it's kinda the missing link in your chain. They often come with "lite" vesrions of software. Some of these are to restrictive to usem but I've been using Sonar LE and it's fine for me.

Can't help you with the popping noise tho.
Line 6 TonePort = <3

Cheap, effective, and if you take the time you can get some great tones. If you listen to the song on my link in the signature or on my profile (shameless plug) you can hear one of the first distorted tones I got along with a little clean bit around the middle.
I like my amp tone, miccing the amp through the interface, would that be a good idea?
Standard Fender Telecaster
Fender Blues Jr
I'd personally rather mic my amp through the interface - it's the way to go if you specifically like your amp tone.

Of course, the mic you have could mess that up. At $40, it's not likely to be a superb recording, but depending on whereabouts you place the mic, it should be alright. Just experiment lots.
Since I don't have a studio, studio per say.
I'm not going to get the best accustic in the world.
Plus the sounds will bounce off of furniture or whatever i have in my
so call pratice room.
Then I still have outside noise or the air conditioner kicking in to contend with.
I had a reel to reel ...that was insane to run patches manually through the patch
board. Eperimenting with mic placement was cool.

I like to go direct.
My Ditigal recorder comes with guitar FX or tones. Plenty of amp tones
it'll emulate. I also have the GT8...alot of amp tones, veriouse mics,
speakers, mic placements i can mess around to get tone.

it's different. it's better for me to go direct.
I was getting buzz or distortions from running all those stomper pedals I had.
So going direct gave me a cleaner recording.

Plus if i need to work on a song a month later. A more consistent guitar tone,volume
can be achive if I made notes of the settings.

If I mic it...I'll have to remember exactly where i put the mic...and if I change the
furniture around..it's going to effect the accustic.

Plus I can work on my recordings at 2am without bothering anyone.
About the popping and crackling sounds....

Your hard drive speed *could* be the problem. Does it do this each and every time you record a single track, or does it start to creep in with the more tracks you add? Geez... I can't imagine trying to record to a 5400 rpm hard disk. People do it, though....

More than likely, your problem is in the buffer size settings. If you set it too low (like you would if you wanted to monitor through software with really low latency), then the buffer is so small that it has to dump stuff to the drive in very short, quick bursts, and then quickly switch back to re-filling, and winds up basically tripping over itself. Increasing the buffer size lets the computer cache more data and write it to the disk in larger packets, meaning that if the computer is asked to do something else and doesn't quite get back to concentrating on switching back and forth between collecting data and then writing to your disk and back, the cache is still filling up, and it has lots of data to keep writing. Not a perfect explanation, but kinda gives you the idea.

Could I get some more talent in the monitors, please?

I know it sounds crazy, but try to learn to inhale your voice. www.thebelcantotechnique.com

Chris is the king of relating music things to other objects in real life.
well I have a laptop and I don't think they even offered 7200 when I bought it. Also an external that spins at 7200 that is also firewire is pretty spendy.

Yes when I layer multiple tracks (usually more than one) is when it happens. So how do I fix it or change the buffer??
Standard Fender Telecaster
Fender Blues Jr
Toneport UX1.

It has one instr input and one mic input, and you can run both simultaneously. Or you can run two instruments at once through the back (Line input 1 and 2).

But you should get like, recording software like Cakewalk or some sh*t like that. If you're cheap like me, you can download krystal audio or Audacity.