Havent looked into this for years and years, but I think software distortion effects dont sound good. At least not like an electric guitar sound, since "good" is highly obective. I think they dont work in real time either. Then again, my software and hardware is from 2002.
I'd buy a multi-effect, you can get good ones at 100 bucks (at least you could in 2000). But I doubt they work with an accoustic guitar thats picked up with a mic.
What exactly are you trying to do?
Use your comp as a real-time overdrive/crunch/distortion?
I use Cubase SX to saturate the soundfont midi instruments sometimes. No idea how that will sound on an accoustic guitar. I suspect the background noise and buzz you catch with the mic will seriously screw up your results, since saturation boosts the very soft noises.
Cubase SX is a real pain to set up without the synchronisation screwing up tho, and the effects dont work in real time.
If your card name is really Audacity and not Audigy, I dunno either.
In my mixer menu there is a a little louspeaker icon below the microphone volume thingy. If you click on it your can turn the mic on and off, mine also has a "boost microphone" to make the mic louder.
Oh yeah, I just googled it.... confused it cause my soundcard has a similar name.
The thing doenst look suitable for making music tho. There are some old progs like Cubase or Cakewalk that might be better, if you want a drumset or multitrack recording and distortion effects.
If you play electric go buy a multi-effects pedal with USB out. I use the Boss Gt-10 and digitech metal master for distortion. Software distortion is horrible and not worth wasting your time with. If you play acoustic your wasting your time you will lose so much quality through the mic before you even start to distort. Got to pay to play..:DI got thousands in equipment, and several hundred just on pick ups on my favorite BC.Rich.
Since the thing is only 2 MB, I just installed and tried it.
After I activated the mic (in my soundcard mixer), the thing recorded without problem.
The microphone volume slider always resets itself to 0 in the AUdacity software, but the mic volume I set in the soundcard mixer works fine.
You can create saturation by selecting "amplify" under "effects, putting it so something ike +11 dB, and chicking the "allow clipping" box. If you dont allow clipping, there will be no saturation.
If you look the sound is subjective, bluesy stuff sounds ok, but you will never get it to sound like an electric guitar like korn or metallica or stuff like that.
Spazzy: Actually the program is quite nice, dont get Cubase which eats too much system resources. Cant get the "import midi" function to playback the midi file correctly tho. If you cant record anything either ur mic isnt working or deactivated somewhere.
Spitdarkly: Guitar, music style a bit of everything. Not really into death metal but I liek the "arise" and "chaos ad" albums from sepultura.
What Im trying to say is that I can find no option that turns that on or off in the Audacity software, but my soundcard mixer software allows me to turn me hearing myself through speakers on and off.
The effects you see in the list are applied to the recorded waves, they dont work in real time, in case that is the reason you insist in trying to somehow make Audacity forward you stuff.