Interleave = Mono or Stereo - educate me

Yeh, unfortunately it's more complicated than you might think. Any simple rule one might offer will always have at least one exception. Stereo effects on mono tracks, for example. Sometimes you really do want to do that.
 
But it's Christmas Eve and I'm blowing off work, so I'll take a stab at summarizing - bearing in mind that any of these statements can and do have exceptions.
 
1. If you're recording a mono source, set the initial interleave to mono and choose a mono input from your interface. Anything you put into a single microphone is mono and should be recorded mono: guitar cabinets, acoustic guitars, individual drum and percussion mikes, brass, woodwinds, violins, vocals. 
 
Note: M/S miking is not stereo, it's two mono tracks with mono interleave.
 
2. The output of every mono track will normally be routed to a stereo bus. This is not a conundrum, it's how it has always been. The single audio stream is simply split and sent to both sides of the stereo bus. The track's pan knob merely determines how much of the signal goes to the left side and how much goes to the right side.
 
3. You'll usually want to set the track interleave to stereo - even if it's mono data - if you want to insert stereo effects in that track's fx bin. If you're using only mono effects, this is neither necessary nor recommended. Whether this is truly necessary depends on the plugins being used, but it's best to assume a stereo interleave.
 
4. Don't use mono effects on stereo material, or on stereo busses. Some plugins handle this mismatch intelligently, but most do not. Typical symptom: a track doesn't pan the way it should.
 
5. Don't set the interleave to mono if the track data is stereo (you see two waveforms on the track). Better to convert the data to mono and then treat it like any other mono track.
 
6. Avoid mixing mono and stereo effects on the same track if you can. SONAR is smart enough to know about the inputs and outputs of each plugin and will create internal mono and/or stereo paths as needed. But you can't see this happening, so it can lead to confusion. More than one forum thread has started with "the pan knob is broken!". It's often a result of mixing mono and stereo effects.
 
7. It's not always obvious whether a plugin can or cannot handle mono inputs, or whether its output is mono or stereo. But this is crucial information that you have to know before inserting a plugin.
 
(Unfortunately, Plugin Manager will only tell you how many inputs there are, not whether its output is stereo. You can look in the VST Inventory in the registry to find out how many inputs and outputs a plugin has, but that's all - not how it behaves when the "wrong" data is fed into it. You just gotta know your tools, and if you're buying a new plugin every other day chances are you don't know any of them well enough, and should think about paring down your tool set.)
 
Take reverbs, for example. There are, AFAIK, no mono reverbs in the digital world. They can, however, accept mono input (some, like PerfectSpace, require setting a mono switch) -- but they almost always have stereo outs! (Part of the effect is to randomly spread your mono signal left-to-right to emulate natural reverberation.) That means any time you use a reverb as an insert effect on a mono track, you have just made your track stereo regardless of the original data.
 
Another example: amp sims are typically mono-only (like a real amp). Run a stereo source into an amp sim and you've just converted your data to mono. Another reason to record electric guitars in mono! As stated above, you should avoid using mono effects on stereo data, regardless of the interleave.
 
You can see how this can get very confusing if you have lots of insert effects on a track. The data might actually be switching between mono and stereo several times before it finally reaches the bus, and it's possible the end result will not be what you had in mind.
 
Oh boy, and I arrogantly thought I could keep this simple. Instead I barfed out a stream-of-consciousness brain dump. OK, try again...
 
1. Mono data -> mono effects = mono interleave
 
2. Mono data -> stereo effect = stereo interleave (most of the time)
 
3. Stereo data = stereo interleave = stereo effects ONLY
 
4. Stereo data + mono effects = avoid
 
Whew. Maybe I should have just gone to work instead. I am not gonna proofread this post, so you'll have to tell me which parts were gibberish.
 
Maligayang Pasko, everyone!