Creating your own podcast is easy. Really. Don’t let anyone tell you any different. There is no one path that you have to follow. People record podcasts with equipment ranging from voice recorders and cell phones to full blown studio gear. But it doesn’t really need to be that complicated.
Early on, people were having difficulty understanding how to configure their PC to record both the microphone input and the output of audio applications like iTunes. On the Macintosh, you seem to need third party applications, but most PCs allow you to do this directly. To demonstrate, I made this short Windows Media Video demonstrating precisely how I used to (and still do, for the vast majority of my podcasts) record using just the free software recorder Audacity and a cheap headset microphone. Enjoy!
Addendum: the link above was broken, so I decided to just go ahead and link to a Youtube version of the video. Enjoy!