For sound editing you can use Reaper (Poormans ProTools), it is freeware/shareware, not pirated (if that matters to you.) It is full featured and not crippled in anyway like most freeware/shareware demos; can check it out here:
http://www.reaper.fm/download.php
There is also Audacity (free) I could never get that to operate correctly on my system, but from what I've read I'm sure I am better off using Reaper.
I think you can still DL Guitar Rig 3 which has some decent emulations for bass and guitar. That demo isn't full featured
afaik, but should still offer some functionality, and well, it's free.
Just do the best with what you can get.
For a mic on a tight budget, how about building your own? Build a studio quality +48v phantom powered Condenser Mic (for under $35!)
http://www.diycondensermics.com
There are also "cheap" manufactured mics for around $30 as well such as a Shure C606, can also get a USB Dynamic Mic, (standard type mic that plugs directly into USB port.)
And yeah, you do have a lot of reading to do; and after that even more times spent experimenting.
Enjoy.
