I'm sorry if this has already been answered, but I'm experiencing the same problem (recording a flat line), except I'm using a keyboard as a sound module, plugged into my Mbox2.
I can also hear the keyboard whether or not software monitoring is enabled.
As a complete newbie (last night was my first attempt to record myself as my other bandmate that usually does it is out of town indefinitely), when you say,
"The first thing I would do is go through your interface's software and make sure you can NOT hear your guitar when in Logic "software monitoring" is disabled."
- I'm not exactly sure how to do that with the Mbox 2 - I've tried looking it up but keep getting conflicted answers.
Any idea on how to do this with the Mbox2? Thank you!