Though the blues guitar sounds aren't truly coming from Ralph Macchio's fingers, the actor is actually playing note for note the music of Steve Vai and Ry Cooder. His fingering, slides and bends are precise until the "main" solo, which incorporates Paganini's 5th Caprice, in which it is obvious he is not fingering the correct location on the guitar, as well with the patterns, this can be seen since he uses mainly the same pattern (scale on the top frets, then another one in the bottom frets) and all the scale portion of it, the scales are shifting and changing sound, but his patterns remain the same.
"Eugene's Trick Bag", the updated classical piece at the climax of the film, is largely based on Niccolo Paganini's Caprice #5. Paganini, as the pervading myth has it, sold his soul to the devil for his musical skills. Steve Vai, as 'Jack Butler', replicates Paganini's legendary rolling eyes, long unkempt hair and gaunt stature.
Arlen Roth was Macchio's guitar tutor for the film and played many of his pieces in the movie. According to Roth on his site, arlenroth.com, the final duel was arranged from parts played by himself, Vai, Cooder and Bill Kanegiser, who did the classical playing throughout the film. Roth wasn't credited for his work on the movie, due to a contractual disagreement.
The Fender Telecaster Ralph Macchio carries along his hobo trek in the second half of the film is a 1970s CBS Fender with block lettering on the headstock. Very realistic for the film because not only were they affordable and easy to acquire (in the 1980s, that is), their heavy polyurethane finish made them near impervious to the tests of the road, as seen when Macchio and Seneca are walking through the rain, sleeping in barns, abandoned shacks and the outdoors. You could take a CBS Telecaster covered with snow, plug it in and it would play perfectly.
After the guitar dual, Eugene plays "Big Bad Moon" by Joe Satriani. FALSE. The riff is similar to 'Big Bad Moon' but the Satriani piece wasn't written and recorded until 1989, the movie came out in 1986!