There are a few different ways of doing this; first, you could just use one of the commercially available portable multitrack recorders available on the market. This works well, since many of the fine units available have inputs well suited for recording guitars directly, and even include built in effects! But, what if you don't have one of these recorders?
For this instructable, I'll be describing the recording setup I use, which is based on some great software available from ubuntu.com (the operating system) and ardour.org (a great multitrack recording program,) both of which are free!
As my computer is a bit light on RAM, the only problem I've had has been a latency problem, or the delay from the time the guitar signal goes into my GuitarPort interface until it actually gets to the track it's being recorded on. In addition, recording direct often leads to a somewhat sterile, artificial sounding tone. In the big studios, this problem is avoided by recording an actual speaker- installed in a padded box- with an actual microphone, just the way nature intended! If you're handy with woodworking, these boxes can be built in a weekend or so, but that's for a different article! Here, I'll show you how I made a speaker iso box using things I had around in about an hour!
Materials you'll need: a medium or large plastic storage bin with lid; a small practice amp or extension speaker-(I used an 8" speaker for my project, but this can be replaced with a 10 or 12 inch if you have a large enough container; old pillows or blankets; a microphone with cable; speaker wire with a 1/4" plug on one side, and female spade connectors on the other.
Step 1: Cut a round hole in one side of the container for the speaker wire, and another in the other side for the microphone cable.
A quick PS for the gearheads: The amp I had available, and has worked out very well, is the guts from a Roland Spirit Bass 50 from the mid 90's or so in a crude cabinet I made just to hold it. Though I could have used the baby practice amp in the bin, but having the amp head separate allows obviously for better control, and the Roland amp sounds great, with a full, punchy sound that works very well with effects feeding it.
Thanks for looking, and I hope you enjoy!