I've done home recordings of voice and guitar with a 57 and a Tascam 424mkII 4-track for a while, and I've been able to get results that I'm very happy with, even by comparison to recordings I've done in pro studios. It took some experimentation but this has been my experience so far:
- not sure what kind of guitar you are playing, but obviously better guitars record better. ALWAYS record with new strings; I've found that the phosphor bronze variety are overly bright for recording so I use regular ol' steel strings or the gore elixir strings (my fav).
- your 57 is a fine mic for doing casette 4 track recording. Before spending your money on fancy mics, give much thought to room acoustics and mic placement-- their effect is more profound than the particular mic you're using. Ditch the radio shack 2-mic technique-- one well placed mic will sound better than 2 poorly placed mics.
- take room acoustics seriously- they contribute as much as anything to the recorded sound. Small, untreated rooms have serious problems with slap echo and bass response, and it's impossible to fix this in the mix. The $200 I spent on studio foam and bass traps have given me improvements FAR beyond any $200 mic I've bought. If you don't want to treat a room, at least find a big room with a lot of damping materials (sofa, carpets, curtains, etc.)
- find a place in the room that sounds good. Listen to your own voice; try to stay away from walls, as they may reinforce the muddiness that you're hearing.
- experiment with mic placements. Every guitar sounds different, and experimentation is the only way to get a sound you like; close miking will help with slap echoes and other nasties, but keep the mic away from the sound hole. Either mic near the neck/body joint, or put the mic over your shoulder next to your head and point the mic down at the top of the guitar. This is my favorite mic position with the 57 and my Taylor 714ce, and gives me a sound very similar to what I hear when I'm playing. I usually mix this with a bit of the signal from the bridge transducer and get a very nice sound.