> A USB audio interface (to support the two microphones).
> Digital Audio Workstation software. There is a little bit of a learning curve, but it's worth taking the time.
Browse around at Sweetwater - there are a lot of good entry level packages for sale.
Apple's GarageBand makes this type of live recording much easier. I've yet to see an entry-level PC system with anything comparable.
That depends on your standards. In many ways, the default PC hardware is better than anything available at any price prior to 1960 or so. It's certainly better than any cassette recorder.
The result will mostly depend on whether you set the recording levels correctly and whether the mics overload the preamp. Some experimentation is required.
Obviously, if you have thousands of dollars, you can get some pro equipment.
It is an easy answer: Buy a PowerMac with the garage band set up...but if you're a PC guy you will never think this is an option.
Of course, if you purchase the Macs, particularly the Power Mac, you'll use it everyday for the next 10 years without any need for serious upgrades VERSUS buying at least 5-7 PCs with constant needs to be bandaged and upgraded.