how strange... you got my curiousity, so I hooked my guitar to it, and it worked fine. Do you make sure to select Line Input in the Audio Preferences in Garageband. It will say, load in drivers for Direct Line Input? Select yes, then add new real instrument track. Click on the track to select it and highlight it. In the bottom right corner you should see an option to monitor the track. Turn this on and turn it's volume fader up all the way.
You should have dry guitar, which you can change at any time by selecting amp simulation options in the far right panel. If you can't get this to work, I don't know what to tell ya. Maybe, your Macbook has an audio input issue. I still think you have mic selected in garageband preferences.