Yeah, what he said...
You set your interface to whatever input source from which you are trying to record. If you are using a DIGIdesign interface, your input should correspond to whatever channel you are plugged into.
For example, I use my keyboard samples to record all my drum parts. I have my keyboard plugged into channel 3 of my DIGI 001, so I set one track for Kick (input 3) the next track for snare (input 3) and on down the line. All tracks are seperate, but they are all coming from my keyboard which is plugged into channel 3.
Make sense?
-Kev