Ok, RAM is also a big consideration, especially when running multiple VST Instruments, I would suggest 1Gb as an absolute minimum.
Your soundcard is almost certainly not upto the task so I would start by listing all the various ins/outs you will need, to me it sounds like the following:
midi in/out
stereo line in for synth/keyboard
mic/line in for guitar
Most decent audio cards are designed to hook up to mixer or amp/powered monitors so you may want to consider this or simply use headphones, they are also primarily designed with decent stereo recording and playback in mind rather than surround sound, you may want to consider a Firewire/USB 2 solution so you can use your Dell soundcard for gaming, personally I would ditch the 2.1 and just go for a stereo setup.
A good basic card to go for is the EMU 0404, its limitations are that it doesn't have a headphones socket or many line ins, however you could always get a cheap mixer and plug that into the soundcard to expand the number of inputs.
I recently bought a PCI EMU 1616 and it is fantastic depends on how much you want to spend I guess.
A rough guide (PCI Based):
KRK Rokit Powered 5 Powered Reference Studio Monitor (Single)£120.00
E-MU 0404 Digital Audio System £59.00
Behringer XENYX 802 £39.00
M-Audio Oxygen 61 £94.99
Total £312.99
In the above I would replace the M-Audio with a second hand synth (Yamaha CS1X) because you get much more for your money, you could ditch the mixer if you get a controller keyboard because it doesn't have it's own soundbanks and relies on VSTs.
That is probably one of the cheaper ways to do it, most Firewire cards with plenty of in/outs start at around £200. I have no experience with the mixer or midi controller or in fact the speakers in the above example. I'm really just lobbing some ideas at you

Neoni has just bought some KRK speakers, I hadn't heard of them until he posted that. I', assuming that they are a decent brand.
I can recommend the EMU 1616 and Yamaha synth but then you are limited by the speakers you are using and to spend more on a soundcard then monitor through cheapo speakers is a bit of a waste IMO.
Gonna have to do some work now, I haven't really read through what i've suggested so there may be som glaringly obvious things I'm missing.
Oh and I've used cheapo midi cables for years without any problems!