This application Reaper is free to evaluate.
It is a very high-end package for the money.
The evaluation period has absolutely no restrictions, and best of all, even after
the evaluation period has expired, you can still use/evaluate it with absolutely no
restrictions.
Basically, it is free - but one does feel very compelled to purchase the home user license at a fraction of the commercial license - once you get into it.
It has complete midi functionality, a plethora of high-end effects, no limit to the amount of midi-tracks or audio tracks you wish to record.
Fairly straight forward operation.
http://www.reaper.fm/
Click on the Latest Reaper - link, to download the app.
Note it has also a very small footprint installer - less than 10MB.
Peace
Ausser.
Ps: regarding your setup - ie into the mic jack of your computer, you should be able to send that into reaper as the audio in.
In reaper, you should be able to set up effects and EQ that will greatly limit the noise from a Mic Jack input - as well as add additional effects.
http://img822.imageshack.us/img822/8238/reaper2.jpg