WavePad is awesome! I have used WavePad for many years to edit audio files, and have recently begun to use it to record guitars and vocals. My setup is very basic, as I am a beginner and trying to learn more about recording audio (I recommend TweakHeadz guide) before spending more money.
Recording with WavePad is easily done. The quality of your recording will depend on many factors, but the basic things required are as follows:
Soundcard or audio interface...
This is where the conversion from analog to digital occurs.
I have a Lexicon Alpha, which is an inexpensive desktop audio interface that connects to the computer via USB. There are many alternatives which vary in quality, convenience and price – my initial primary concern was to have easy access to the controls and input/output jacks.
Preamp...
The signal from a guitar pickup (or microphone) needs to be boosted to line level. Although the Alpha does have an instrument input, the signal is very weak when I record directly to WavePad. You can amplify the file in WavePad, but I knew that I needed more. After much research and deliberation, I recently purchased a DMP3 microphone/instrument preamp from M-Audio. This unit has dramatically enhanced my recording experience. There are many pieces of gear, such as a mixer, that come with preamps, but I want to learn and plan some more before making the next step in my studio gear.
It took some trial and error recording into WavePad to understand how to set the levels on the preamp and the interface, but the results are fantastic. At present I use it basically to practice with, as I have yet to have figured out how to successfully utilize the MixPad program to add new tracks, but that is a subject for another time.
Best of luck and happy recording!