OK, riffjunkies, lets help this guy out!
Your spec for computer seems to be OK, I would recommend a secondary harddrive (perhaps RAIDed) somewhat bigger if you are gonna do some serious recording.
I'm also a novice but as far as I can tell you there are two vital components missing in your setup:
1. An external soundcard/recording interface with at least 4 or 8 channels. This can be either an USB or Firewire based soundcard (and both will work fine with your computer). Now, there are literally hundreds of different soundcards out on the market so choosing one is a jungle depending on your requirements. A first step could be to checkout this site:
http://www.recordingreview.com/soundcard/soundcard_wizard.phpThis site will propably narrow down your choiches to only 20-30 soundcards

After this I would recommend you to read home recording magazines to see which ones they recommend.
2. Multitrack recording software.- Riffworks is a recording software aimed towards a guitar/riffbased audience. There are a number of others available and I don't have neither the skill or experince to recommend one for you but the most known ones are: Pro Tools (almost industry standard), Cubase, Sonar, Ableton Live etc. All of these cost a lot and are well known with big communities surrounding them and with great support for all kinds of plugins, extensions, drivers etc. There are other excellent lowcost alternatives like Reaper (which I use), Audacity etc.
When bying a soundcard for home studio recording you might get a some recording software bundled with it and if you are lucky you might get a LE (Light Editiion) of some well known product like Cubase or Pro tools. These are usually excellent and have all the basic functionality you need to start with.
Hope this helps you a bit on the road.