Suggestions for basic recording setup

I'm looking for suggestions on how to integrate some basic recording hardware into my system.  It's an old computer running Windows XP with only a low-end Sound Blaster audio card.  I have been using a very small analog mixing board and plugging it into the line in connectors on the Sound Blaster.  It works, but the biggest problem is switching off the speakers and monitoring with headphones while recording.   The only way I can do this now is by plugging the headphones into the connector on the front of the computer (which shuts the speakers off) but now the mix is totally inappropriate for monitoring.  I've tried all kinds of adjustments in the Windows Control Panel for audio devices but nothing works.
 
What I would like to do is find some type of hardware that would allow me to do some very basic recording using only one or two channels at a time with a decent headphone mix  -- and then be able to switch speakers on and off easily as required to do normal mixing.   Note that going back and forth between recording and then listening to playback  is something that I do dozens if not hundreds of times while I am working on a project.  I need a better system that allows me to switch more efficiently.   Any suggestions?

Yes that's all you need is a real audio interface. It will be the heart of your studio. You'll be upgrading your computer soon anyways but the same little box will work no matter which computer.

My list of things to look for.

How many Mikes - "XLR" will you use?
How many instruments- 1/4" will you use
Will you need RCA inputs for Tape transfers
Will you use SPDIF input from a DAT machine or digital mixer
Will you use SPDIF output to powered studio monitors
How many outputs will you use.
Do you need MIDI in and outs
Will you use headphones.
Do you need phantom power?

Look for a control that will blend the input signal with the output to use for zero latency monitoring. Sometimes marked Computer/Scource. 
Look for pad switches for the mike pre amps. 
Make sure that there is an option for a power supply or even better it uses AC power. This comes into play if phantom power is to be stable. 
The hidden spec of round trip latency ( RTL)  needs to be known, but only if your planing on using real time efxs while recording. Like guitar rig will not work with higher RTL. 

I high quality recording is desired then you pay more with this mostly being towards good quality mike pre amps. CHeaper units just don;t cut the mustard with pre amps.   

But most important is that the device comes with well written ASIO drivers that are known to perform with your operating system. You might have issue with newer interfaces and XP support. Make sure the interface you buy has other users running Sonar under XP fiist.

 a good interface is key,but more so is the computer you are using.
you can buld a good computer to do exactly what your trying to for about 450.00 bucks.

i hear alot about people buying these off the shelf 1300.00 intel i7-16 gigs and really dont understand why.
my custom built computer with an intel i7 12 gigs of ram is auesome.
but ive have yet to see the huge advantage compared to an amd phenom 2-6 core/8 gigs of ram.
ive plugged 10+synths,30+audio tracks with mountains of vst's and honestly
the only thing i notice different about the intel,is its load time.
it loads a little bit faster.

so here it is.

a custom sound performance computer case 80.00
a gigabyte mobo with a phenom 2 black or 6 core combo 150.00
8 gigs of cosair ram 35.00
power supply 500psw 50.00
500 gb hard drive 80.00
dvd rom 20.00

thats 415.00 dollars.now put some tax on it and your sitting right where i told you,with a brand new custom made computer ready for sonar x1

now your interface,that soundblaster isnt going to cut it.
your best off with a break awaybox usb or firewire.

id go with something like a focusrite saphire 6 usb
it was one of the first windows 7 ready interfaces
and has midi,two 1/4 inch guitar jack inputs and two
phantom powered xlr microphone inputs.
it also has onboard midi in/out
and to boot it has the award winning focusrite pres amps that have made focusrite one of the best companys around.
the interface will run you about 180 to 200.00 depending on if you catch a sale or have mail in coupons from like guitar center.
this takes carefull planinig if you want to do it right and cost effective
exspeacialy the interface,dont skimp and dont buy something because its either all they have or on sale(being pushed that month)
do your homework hommie.
being a daw head isnt cheap.