Good advice to be sure (especially about cutting back on the distortion), but if I were you I'd keep trying (that is, experiment) with the direct in--skip the amps altogether, and with the money you're not going to spend on the often giant and unwieldy amps, buy good mics and extra computer stuff like, say, RAM. I haven't recorded with an outboard amp since the Porta One days, though the one time I did it it did sound quite good. You can get just the sound you want, but the "plug and play" simplicity of direct in causes us to think its a bit easier than it usually is.
Our band is currently playing in a small bedroom--about 13x13--with the drummer using sticks, myself on electric, and, incredibly, another guy about two feet to the drummer's left on 12 string acoustic. It works! I go direct in,
using a $70.00
Zoom G1; the whole thing goes through a 24-track mixer, and then into the computer. We listen through headphones. (The 12 is miked.)
The point here is that it took me a while to figure out the various output and input levels for the interfaces--I thought for sure that the Zoom wasn't going to work out (I used a Boss 532 before, and still use it for recording), but it turns out that the default output was way too high, and all the algorithms sounded like shit until I turned the thing down. Now, even with the drum outputs
way too high (at least for last week), the mix sounds great.
The tweaked sounds that sounded so great over a pair of headphones on the G1 but were sludgy sounding on the recorder are now sounding the way I originally hoped they would.
I'm not saying to only go with DI. However, the convenience of DI, coupled
with the increasing sophistication of DI devices, means that sooner rather than later most recording (and of course live work) will be done with relatively small, powerful modeling devices. RM mentions the purists; of course any talk of pure DI is going to make the purists pine even more for the good old days of large, expensive, good-sounding amps (and, truthfully, small, expensive good sounding amps). All well and good, but I'll be throwing my little G1 into a kit bag and taking it where and when I'd like while the purists throw their backs out humping their gear. Watch out for the ice!
PS: Sorry about the long post . . .