Right now, I have the 8 outputs on my mpc2000xl. so I simply track them out that way. When there are more than 8 outputs, I will add a cue marker to each track, like a 4 count of a snare or something, in order to make sure everything lines up. this is the way I did it before the 8 outs as well. Just soloing tracks, 4 count snare record the track. It was tedious, but it worked well.

I would suggest learning how to use the midisync though if you are using protools or something similiar, it would make things much easier. For some reason though, I simply can't comprehend midi.

but to anwer more direct.. yes track per instrument, even brreaking drums up into hihat track, snare track, kick track, bass, horn, etc.