Dude, where's my strums? (Tascam US-122/Win98SE)

[LilSpider]

I'm having a problem with lots of background hum/buzz and very faint registering of the music I'm actually playing. I have a hunch this is related to my very old computer, but before I throw down some cash (or throw in the towel), I'd like to go fishing for some help. This is a long post, but hopefully the amount of info will make it easier for the more experienced folks to advise me.

My goal
I've used Audacity on and off for a year or so to edit some tracks that were recorded in the past, but now I'm trying to do some recording. I'd like to use Audacity to record backing tracks (on acoustic guitar) that I can playback to help me work on guitar solos. Occasionally I'd like to throw in some vocals for fun, but mainly this is just a hobby. Sound quality wise, I'm interested in clear recordings, but there's no intent to post anything on the internet or make CDs or have high-quality polish on anything I do (at least at this point in my learning process).

My computer
Sony Vaio PCG-F520 laptop
Windows 98 Second Edition
64 MB RAM
2 internal hard drives with ~2 GB empty space apiece
Intel Pentium III processer
Yamaha DS-XG PCI Audio CODEC soundcard

My Audacity (on the laptop)
Version 1.2.4

My Audio interface
Tascam US-122 USB powered audio interface. This is a loaner. I know it's not defective because I've used it with the owner on his set up (which includes a Win XP laptop).

My Other equipment
I use one of those pick-ups that you wedge into the hole of the guitar, and plug it into the Line/guitar (L) jack in the US-122
Line out from the US-122 goes into a Peavey speaker
Connection from US-122 to laptop is via USB port
I've installed the Windows hotfix that is recommended in the Tascam documentation
I've checked all connections and plugs and can't find any problems

My Problem
When I record, Audacity just shows a line with no waves registering. When I play it back, it has picked up a very faint bit of my guitar playing, but mainly it's just hum. (So the connections are at least partly good because it's catching the guitar playing.) If I normalize what's been recorded, it just creates a really loud hum. I've experimented with changing lots of settings and volumes on the US-122 as well as the laptop to no avail. Not that this is related to the problem, but my line out to the Peavey is fine (I've also verified that the result is the same using just the laptop speakers.)

My settings
1) Control panel
I've tinkered with just about every combo, but based on what I've read on this forum, I'm fairly confident that this is what I should have:
Laptop control panel >multimedia properties>audio>recording>preferred device = US-122 A:B
multimedia properties>audio>playback>preferred device = US-122 out
(Notably - or maybe not - by choosing these settings, I lose access to the "volume control"/mixer icon that is often referred to in this forum . . . not sure if this is significant.)
2) Audacity
Audio>Preferences>Audio I/O>Recording device=US-122 A:B, Channels=2(stereo) [I've also tried 1(mono)]
On the mixer toolbar, the only options are
-Telephony
-microphone
-cd audio
-stereo out
-Line (ext)
. .. It doesn't matter which of these I select, the problem remains

Likewise for the audio interface: I've tried both settings on each of these switches on the US-122 without resolving the problem: Phantom, mic line/guitar, driect, mono.

My journey
I got a chuckle out of the US-122 manual, which says, ". .. on our website, you'll find our always lively Online User Forums." Hmm. Not so much. Alas, I couldn't find any forums. So I did some heavy googling and found a few forums around the www that described problems, but nothing that really fit what I'm experiencing.

My plea
I'm hoping someone in the Audacity community might recognize a simple flaw in my set up and point it out to me. I'm also open to steps that I might need to take in terms of purchases. I have skimmed some of the soundcard posts herein and know that might be a reasonable next step. Even the knowledge that there is no hope if I try to center my recording around this old laptop will help me get started on the stages of grief.

Thanks!