Heya Mark.
First, I personally think Steve led you down the right path with N-Track. For the price, it is hard to beat the functionality of it...and its so darn easy to use.
Now about your problem. It could be several things..so you kinda have to play around until you find out. You noted line-in was not muted..so thats out. I don't know what kind of sound card you have, but some sound cards (like my soundblaster platinum 5.1) asks you to pick a recording source as well. How that is done differs from card to card. You need to make sure this is selected properly as well. Easiest way to tell if the recording source is set correctly is to just open the 'sound recorder' that comes with windows. (programs->Acessories->Entertainment). Hit the record button and see if your guitar signal records there. If it does, its a problem with N-track.
In N-track, make sure the recording VU-Meter is up. Also make sure the monitor button is pressed. Then start playing. If the VU-meter does not register, then your N-track prefs are set wrong. If it does register, you should just be able to hit the record button.
There is a 'settings' button on the VU-Meter as well. Make sure everything under that button is set correctly.
Otherwise, it would be new to me. You may have to go into N-track preferences and see if there is something there that is haywire. Such as wave input devices (you should see your soundcard)...etc. Maybe Steve can shed more light.
Hope this helps you out. Let us know.
Want a link to some direct x plug-in tuners? 
