I have an electric guitar and an m-audio preamp-usb and would like to use my laptop to record music as well as listen to what I am playing. I would also like to use it as an effects processor. Ι have an amp but no effects or overdrive.
You need amp emulator software.
Guitar Rig is one well known example. You can download a demo version for free.
Whatever software you get, it will come with detailed instructions. Your USB audio interface also has detailed instructions. It may well have come with some demo software.
To record, you need a digital audio workstation. Examples of these for PC include Cubase and Ableton Live.
if you wish to use your computer as an "effects pedal", I recommend IK Multimedia's Amplitube 3 - it has an extensive array of effects and amplifiers with all kinds of crazy and fun tones to mess around with. Theres a ton of effects, so I recommend you check it out. It is a bit pricey though ($199 for the standard edition). If I were you, I would download the Amplitube CustomShop, which is basically a free demo version of the full software.
When it comes to setting it up, I keep it simple. I like to run the headphones jack of my computer into my amplifier, with Amplitube running on said laptop (ofcourse).
If you are familiar with - a special kind of - programming, you can use something like Pure Data or Max MSP. Pure Data (PD), for example, is an open source, visual programming environment for manipulating streams of data like audio (or video). With PD you are able to build your own individual FX chains or use community contributed patches (In PD speech "programs" are called patches). But I think it's not as trivial to use as out of the box products.
I've used 3 effects applications till now: Amplitube podfarm and guitar rig 5. The best software I found so far is guitar rig the sound it gives is amazing it has some pretty good presets and it has an intuitive interface I recommend trying out demos of every software to see which better suits you. I recommend guitar rig. I would suggest using a PC instead of a laptop because they're processor intensive. Anything that's part of the is series is great (i3 i5 i7). Good luck and remember to get asio4all drivers google it and get the newest drivers
You can assemble your own system from disparate components, hardware and software, and spend a lot of time and confusion getting them all to work together. But the easiest and ultimately most cost-effective route is to purchase one of the least-expensive Apple Macintosh computers, all of which come with Apple's free GarageBand software installed. This will provide you with a wealth of tools for amp emulation and effects in an integrated environment for multi-track recording and editing (and it includes a wealth of drum machine, synthesizers, and sampled instrument libraries as well.) If you outgrow Apple GarageBand, you can suppliment it by purchasing Apple MainStage for $30 and/or Apple Logic Pro for $200.
Apple GarageBand comes free with all new Macintosh computers, and it only runs on Macintosh. There is no "GarageBand for Windows". But Apple also has a cut-down version of GarageBand for iOS (iPhone and iPad) that does quite a bit and can be used professionally on stage and in the studio if you also purchase an iOS-compatible external audio interface.
Another advantage of an Apple Macintosh computer is that they come with a much better built-in sound card than those of almost any brand of Windows PC. You can actually use the headphone audio output of any model of Apple Macintosh without needing a professional audio internal or external audio interface and get acceptable results. Of course, if you do in fact want the highest-quality audio output, especially for multiple channels, you would want to purchase a third-party external audio interface.