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Getting good quality guitar sound

Hello, i have been having trouble getting a good quality sound when i record an electric guitar. With distortion and without distortion the sound is muddy and muffled. I should most likely list my equipment:

Shure SM57 - for recording acoustic and amp (Behringer )
Tascam US-428 - input for mics and guitars
IBM Thinkpad t42 1.6ghz notebook - DAW running Cubase 5

Getting A Better Sound Quality

I have my mic hooked up through my mixer, and my mixer is connected to my computer. I have tried diff volumes, and right now I have gotten the best sound from turning the main vol almost all the way down and turning the mic volume all the way up. I have gotten a pretty good quality from that and if you have any better suggestions it would be greatly appreciated.

How much quality is lost from A/D/A/D

How much quality is lost when going from A/D/A/D? Right now I have all of my outboard gear setup so I compress and EQ going into my DAW and use plugins for mixing and editing but I would like to start using the outboard stuff as inserts into my DAW.

So how do most studios do it? Record clean and insert the outboard gear later, or track with some compression and EQ?