Some good large diaphragm condensers are essential; I recommend Behringer B1 & B2 as a nice place to start. They need phantom power, so you'll have to invest in a suitable mixer - again, Behringer is ideal.

As for soundcards, I'm still running my old Sound-Blaster Audigy Pro which we had fitted when we bought the PC back in 2001 (!) - touching wood, it's still running good & strong, though the antiquated operating system (Windows ME) limits my adventures into new software, which is perhaps just as well.

As for software, try Sound Forge for linear editing & recording; I'm still using SF5, so God alone knows what they're capable of now. Cubase is still pretty standard for multi-track recording, but with computer recording the problem is always a matter of seperate inputs. If you're recording just voice & guitar, then it's entirely possible to do this in stereo with two mics panned exteme L & R giving you two unmixed channels to sequence accordingly. Even on the basic digital 8-tacks, two inputs are standard, which does limit things rather when it comes to bigger projects. Mixing at source is the solution, or investing in a machine with more inputs!

Ableton Live is pretty essential too I'd say, but how many other folkies would agree with me I couldn't say. I use Live 3 (again very old!) to construct all manner of loops & drones & as a composing tool in itself. I've even used it in the performance of traditional ballads, but not, I admit, to a particularly folk audience...

Have fun - that's the main thing. Buy a few copies of Future Music or Computer Music, which come with workable free software, samples & demos & loads of essential advice. And remember - whatever anyone tells you, someone will always tell you something different!