Hi Erick;
Microphone input - yes that will work. You may need a small buffer amplifier in between the radio and laptop. 120 Mhz is a bit slow - you may want to keep the window size small or avoid the oscilloscope display - it eats up more CPU than the rest of the program.
Best choice for a radio is anything that is ...
1. cheap - something older from eBay, garage sale, or ???
2. conventional (trunking isn't required, in fact it's ignored in this situation)
3. can support the actual band of interest.
Usually the mobile/desktop units are easier to mod than the hand-helds; there's more room inside. OTOH, some folks prefer a handheld - particularly for use with a laptop - because, like the laptop - it's portable and runs on batteries.
-rick