Geez, too bad you didn't come up with this problem
before Christmas...you'll have to wait a whole year now!

First if it's that old I'd see if there's more recent drivers available. It should just plug in the computer with a USB cord, and the GuitarPort can be plugged in at the same time. In the "Audio Setup" button on RWS you should be able to choose between them. Riffworks is 16bit, so that's probably the driver that will work best.
It looks from your description that the USB is putting the stereo mixdown bus from the Tascam. You should be able to solo the channel you want to record, but you'd be able to have multiple mic's plugged in, or guitars if you use Amplitube. The fader and pan work on input but you won't be able to mix the layers on the Tascam. Pan the channels to the center to get them into RiffWorks on both the L and R channels.
FYI the MIDI's not going to do you any good unless you use Cubase or another sequencer, sorry! There was a thread up here somewhere on monitors, that'd be a good place to start...but if you're using headphones with the GuitarPort, they'll work fine as well.
Sounds like fun!