Bars & Pipes is possibly the best MIDI sequencer software ever made for any platform. Uses tracks & plug-ins. Will run well on a 68020 or above. Its freely available and still being delevoped by A. Faust.
As for manipulating audio: your 040 will handle doing 2-track edits no problem (i.e. simple mastering of mixed down songs - fades, normalization, etc.).
There is some good multitrack software for classic Amigas, but you need an 060 or PPC card to really use it (HD-REC, Audio Evolution, etc.). On an 040 you might be able to run it, but once you get into EQing or adding effects, the 040 won't be able to keep up.
As for soundcards. There are a few: Delphina, Tocatta....I have the Repulse. I don't know if any are still being made, and if you can get one it's going to be expensive. They work well though. Since you have an A1200 you have the option of buying a MEDIATOR or PCI busboard and using a regular PC Soundblaster card (cheap for the Soundblaster, but the Mediator is expensive).
Then, there's also the whole range of tracker type music programs. They take a bit of work to get your head around, as they are quite different from conventional Cakewalk, B&P type sequencers. But they are very good for highly patterned work, especially electronic music.
