I'm getting a Line 6 Pod 2.0 off eebay and I bought a cable with two 1/4 jacks and a 1/8 jack. I tested the cable with my guitar going directly into my laptops mic in jack (i don't have line in), and I get a very noticeable latency. Will the Pod 2.0 fix this or do I have to do something to fix this myself.

Don't think so. You need the toneport UX1 or UX2, not the pod. The Pod will just process your guitar before it gets to the computer. You need a better sound card I would guess and the toneport would do it.