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I record my vinyl to my computer all of the time. Definitly use your soundblaster live to record, and not your motherboard soundcard. It doesn't really matter that you can't use your digital in, because the original source is analog anyway, so it has to be converted to digital at least once anyway. As stated above, I wouldn't tweak the eqs at all, but I often times do adjust the pitch to around 140BPMs. The less I have to think about beatmatching, the more I can concentrate on where to mix in/out and effects etc.
Other than that I could give you a bunch more advice if you are willing to spend some money, but I am willing to bet that you aren't The cables etc can make a slight difference, and though there are a bunch of things that aren't noticable in themselves, they add up. You should be fine with recording to MP3. Waves are too big, and a 320VBR (variable bit rate) or standard bitrate encoding will do you just fine. That is what I store my MP3 as.
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When you dance, the DJ takes you on a journey, but he or she is usually not the focus of your experience at a club or festival or wherever you hear the music. Dancing is. Music is.
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