Sounds like you're recording with a computer sound card... this will never work good. I tried this with a SoundBlaster Audigy when my recording interface was down. It's terrible, that same sound you're talking about! Get a decent recording interface and you will not be disappointed!

If you want something affordable I recommend the Tascam US-122 for USB or The Behringer FCA-202 for Firewire interface. They are both great interfaces, both affordable (especially on eBay) and I've used both myself so I can recommend them highly.

I hope that helps,
Justin