Yeah, you do need to update the drivers for the Fast Track. Do that on your wife's computer, copy the driver update to a disk or USB thumb drive then load it on the new computer. They have good ASIO drivers, I read.
Why ASIO and not WDM or MME? I don't really have an answer to that. Many folks use WDM with no problems and not much latency to speak of. I think ASIO is newer. It works great for me.
One definite advantage is that with ASIO drivers, you can only use 1 device, therefore all sound card conflicts and incompatibilities are gone. Theoretically.
There is also a newer Windows driver called WASAPI. I have only heard from one forumite who has tried it, but he got decently low latency.
The Fast Track has a software mixer which allows you to set inputs, outputs and levels. Did you open it and try to reduce the input level? And for everyone's benefit, the gain and level meters in a Cakewalk track don't have anything to do with recording; those are just output level controls. All input levels will be set in the software mixers and/or hardware devices.
That delay you mentioned is the aforementioned latency. While using WDM or MME drivers, go to Options>Audio and move the latency slider to the Fast side. Going too far can cause stutters, pops and clicks or outright audio dropout, where all sound stops. So move it a little bit at a time until you get to a point when the delay isn't too bad and there is no undesirable noise.
Reading your post again makes me think it's not latency. Delay while recording the Boss line in but no delay when miking the amp?
Anyway, go to Options Audio and tell us what the reported latency is.