For me, playing with fingers instead of a pick makes me feel closer to the guitar and results in a freer expression.

Studying classical, particularly Bach where you have 2 or 3 separate parts going at once (or ragtime) is also a great technique builder. When you're playing multiple lines together it really encourages you to strive for consistency of tone because the parts have to sound balanced with each other.

I played very (very!) little guitar for about 22 years and when I came back I couldn't hold on to the pick. Didn't have young, moist hands anymore. I had always finger picked acoustic so  I thought I could do it electric but for the single note runs I had to come up with something so I went to thumb and second finger too. Thumb for down, second finger for up. First and forth get in there too but seems to be without my permission. That Dire Straits guy seems to do it with no problem; how hard can it be? Clean, on a Strat= nowhere to hide. Watch Derek Trucks and tell me how he picks. His hands are flapping around like Joe Cocker. He plays pretty clean and you can't hammer on with a slide. Practicing clean can show you some work  you need to do on your guitar too. Intonation and fret buzz. For me, Ive found recently, pick-up adjustment and pole pieces set up right add a lot of consistency to the sound. Way more than I would have thought a few years ago. Anyway, back to software discussion or lack of it. 

My advice after a couple o' decades experimenting with stuff like this is do plenty of both clean/dry and gain/effects along with all sorts of other combinations.  
 
Gain/effects hide a lot of flaws compared to clean/dry but clean/dry hides a different set of flaws compare to gain/effects.  For example, you can get away with sweeping an Em arpeggio at the 12th fret on a clean guitar with sloppy muting technique.  Try the same with high gain and the 12th fret harmonics will ring out.  Another example is a big, spacey David Gilmour style solo with a ton of delay.  Hit a sour note with clean/dry and it might go unnoticed.  Hit a sour note with a loud, long delay and all you can do is stand there and grit your teeth while you wait for the delay trail to stop repeating your mistake.  String noise from sliding your hand around is another example where clean will tend to hide it compared to the compression and harmonics from a setup with some gain.
 
As a general rule, if I'm doing warmups, technique work, noodling, etc., I'll mix it up.  If I'm working on a written part, I'll usually practice it as near as possible to the performance setup.  
 
The worst for me (and thus probably how I should practice the most) is crunchy mid-gain ala Jimmy Page.  Not enough gain to cover up mistakes but just enough that any mistakes stand out like a sore thumb.

Dave76
My advice after a couple o' decades experimenting with stuff like this is do plenty of both clean/dry and gain/effects along with all sorts of other combinations.  
 
Gain/effects hide a lot of flaws compared to clean/dry but clean/dry hides a different set of flaws compare to gain/effects.  For example, you can get away with sweeping an Em arpeggio at the 12th fret on a clean guitar with sloppy muting technique.  Try the same with high gain and the 12th fret harmonics will ring out.  Another example is a big, spacey David Gilmour style solo with a ton of delay.  Hit a sour note with clean/dry and it might go unnoticed.  Hit a sour note with a loud, long delay and all you can do is stand there and grit your teeth while you wait for the delay trail to stop repeating your mistake.  String noise from sliding your hand around is another example where clean will tend to hide it compared to the compression and harmonics from a setup with some gain.
 
As a general rule, if I'm doing warmups, technique work, noodling, etc., I'll mix it up.  If I'm working on a written part, I'll usually practice it as near as possible to the performance setup.  
 
The worst for me (and thus probably how I should practice the most) is crunchy mid-gain ala Jimmy Page.  Not enough gain to cover up mistakes but just enough that any mistakes stand out like a sore thumb.

Good points re: the high gain. Mistakes are magnified and sustained....ouch! I think a lot of people have trouble with that "mid gain" crunch sound. It does feel like you have to work extra hard with it. 

BassDaddy
I played very (very!) little ......[snip]..... Didn't have young, moist hands anymore.

It amazes me how threads in Sonarville always veer off topic....

For the last year or so I've been trying to live by the adage - own every note.
 
Whether acoustic or high gain metal I strive to make sure that every note heard is how I meant it to be played.
It's really forced me to revamp my playing style and address some long standing technique issues.
 
I've been focusing on acoustic guitar lately because, at least for the moment, it makes my flaws are more visible.
I find that if I can't play a lick cleanly on acoustic, I'm not really playing it clean on electric.

roland midi gtr

mixmkr

BassDaddy
I played very (very!) little ......[snip]..... Didn't have young, moist hands anymore.

It amazes me how threads in Sonarville always veer off topic....

Off topic? The father of bass never strays!