First things first. make sure you get the facts from people with experience, and make sure they give them to you unbiased.
There's nothing wrong with using the internet on your DAW machine. However the gear conflicts may hamper things. and this is not solely a windows problem. At my university the recording studio is running a 48 channel SSL Duality into one of the newer Intel Mac Pros. I think it must be a 1st gen i7 or something. They had to disable the ethernet hardware on that computer because it caused crashes, timeouts and other conflicts with the core cards used with the SSL setup, and that was in OSX Snow Leopard. I have the exact same issue on my computer running Windwos 7 pro 64-bit with my MOTU interfaces. So anytime my OS or DAW will be using the ASIO drivers to interact with my audio interface.. I open my network and sharing center and disable the ethernet adapter. Then I have no problems. I also run with no virus software, and except for when i'm recording and editing, my computer is always connected. I never get viruses, just keep your UAC controls functional. That's why linux has such a great reputation for stability, You need to elevate your priviledges in order to do system tasks. People ignore these warnings in windows and disable them, installing whatever on their systems and that really screws things up. Also having a separate administrator account that you ONLY use for system set up and program installation is highly recommended. Have a normal user with no elevated priviledges that you use the majority of the time.
My opinion on hardware mirrors and contradicts some of the advice already given.
I would not suggest buying the biggest baddest feature rich motherboard you can find. Something that costs 120 - 150 dollars will do you just fine. You should have no need for a super fancy chipset or something with 2 x16 PCIe slots that both run at full speed unless you plan on using a SLI or Crossfire setup, which has nothing to do with audio. If you get one of the new sandybridge chips that has onbaord graphics capabilities, that should do you just fine. Especially if you disable AERO and the other desktop effects in windows and revert to a classic windows theme. If you plan on using a discrete graphics card, then basically anything you buy will be overkill (although that's not necessarily bad). Powercolor makes great low budget video cards for as little as 50 dollars that will even allow you to play some directX 11 games. sure with low quality, but it would be more than enough to run you graphics needs, especially with the possibility of multiple displays. That and they're small, very easy to install, and have no fan to make extra noise in your studio space (SOMETHING IMPORTANT TO THINK ABOUT, BELIEVE ME). I'd suggest going with the 1155 socket, Its sensible, not necessarily expensive, and gives you future upgrade posibilities. Go for a brand with built in firewire on the mobo to make hooking up your interfaces easier. Definitely spring for Windows 7 and install the 64 bit version, and fill your computer up with ram. I JUST finished upgrading my computer last week to a 2600k i7 processor and 16gb of ram. The ram cost me 110 dollars. It is dirt cheap right now. So load up, but make sure you get fast ram. pay attention to the clock speeds. get 1600mhz ram or better if you can.
As per the processor cores are concerned. Do yourself a favor and get a quad core. they dont' cost much extra, and most DAW software worth its salt is not designed for X number of cores, it is designed to use whatever cores are available. Cubase is a good example of this. you Will see better performance from a quad core over a dual core. although it may not be apparent until you have 30 tracks with 4 plugins active on half of them.
Alternatively, if you're looking for a better interface. remember that a middle of the line solution could easily take up 75 percent of your budget, just for the interface. So if your tascam is doing the job, stick with it for a bit. Upgrading that part can be expensive.
Which brings me to the soundcard. Dont get one, it wont help you one bit. For the most part when using a DAW and a recording interface, your studio monitors will be hooked up directly to the interface, NOT the computer. you control it directly through your daw and it bypasses the OS (this is the whole point of ASIO). I do not have a sound card, Instead I have my MOTU 896 hooked up to my studio monitors, and my computer has an integrated sound card with an optical s/pdif output. So i hooked my optical out into the ADAT in on my motu, set it to s/pdif from adat in the settings. and run my windows audio through my recording interface. I get wonderful sound quality this way, and there's little to stop you from doing this if you get the right equipment and features. Since the signal is still digitized when it leaves the computer, it never goes through the cheap onboard DAC's. it gets sent straight to my interface in digital form where my pro grear actually does the converting. You do not need a sound card, as you wont be using it in your DAW.
(of course if you get a dedicated recording sound card, like a core card for pro tools or whatever, this is a different scenario. BUT, in that case the card isn't really a sound card in the traditional sense. really it is acting as a cardbus interface rather than a firewire bus or USB interface.
Everyone else has given great advice on hard drives and the like and I have little to add.
You should be able to get a very decent computer for your purposes with much room to spare in your budget. Its the dedicated audio gear that will cost the money.
Save up and get yourself a matched pair of AKG C414s with all the polar patterns and then you'll have a good set of mics to do anything with.
Also there's nothing wrong with using an sm58 on guitar recordings, Personally I use a 60 dollar mic to record my guitar tracks, and its the best i've tried. (equation audio DS-V7)
Thats my 25 cents, id' have more to say but i'm tired and I haven't even proof read my post yet so I'll end there and post any addendums later
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