I record and produce demos on the side. I don't know EVERYTHING about each piece, but I've got experience on most of it.
I have mics from $100 on up to $1500. The only time the $1500 mic can be used to it's full potential is when the room has been treated specifically for voice and/or the acoustic instrument. The mic has to be shock-mounted to isolate it from resonant sympathy.
The Shure SM 57 is a great dynamic mic. MANY concerts and studio albums have been recorded using this $100 mic. Standard mic holder on a typical mic stand and has an XLR connector.
Unless you have an interface that will convert your analog input into digital information for the computer to process, this will not quite meet your needs alone. Typical interfaces accept XLR and/or 1/4" inputs and connect to the computer through USB or FireWire interfaces.
There are several brands that offer USB-powered mics that already contain Analog to Digital Converters. These will be a one-stop solution. Blue Microphones, MXL, Apogee, and other companies have great mics in the $100-150 range.
You can download Audacity free of charge to handle your recording needs. I eventually "outgrew" Audacity and moved on to Reaper. It is $65, but you can use it for 60-days with a full-featured FREE trial.
With a USB mic and either Audacity or Reaper, you will be set to use the mic as a computer communication device AND as a music production tool!
I have spent lots of money in the past on Garageband, Cakewalk, Cubase, Reason, Studio One, and Pro Tools. Those programs are great, but they are also expensive and go through significant upgrades every few years that result in MORE expenses.
I suggest you use Reaper and a USB mic until you decide which direction you want to go. You will not be limited by software or hardware in this case.
PM me if you have any further questions. I'll be glad to help!
Allen