First step is to download an encoder with a line-in recording option.
We recommend Music Match JukeBox or RealNetworks RealJukebox 2 . Do the same thing if you've only got a cassette deck. In MusicMatch, select the bit rate of your MP3. The near CD-quality of 128 Kbps is good for most people. If you've got a rare record, bump it up to 160 Kbps or higher.