I realize this may be an issue with Engine 2 and not with Sonar, but considering the popularity of a number of libraries that use Engine 2 (such as Forest Kingdom II, ERA II, Chris Hein Horns, etc.), I figure I'd ask if anyone else is experiencing a similar issue. The popping happens during playback of MIDI when Engine 2 is activated. I have all of my MIDI in its only folder, so if I archive the MIDI folder and only play back audio then the noises stop. Any ideas on what to do to fix this? 

I have the problem that sonar audio engine is stopping constantly when I use best service engine 2. 

This can happen when the engine you are using is competing with Sonar for resources. For example, make sure you have the samples on a separate drive from the project's audio, or use very fast disks like SSD's. Also, most of these libraries make great use of RAM, so add as much as you can.  Lastly, if your project is at a different sample rate than the library, there is some conversion taking place as the samples are streamed. This also contributes to the problem.
 
In general, I try to bounce tracks as soon as I can to free up resources. I archive the midi and unload the patch/synth. If I have modified the patch, I save it as a preset with the project itself.
 
Regards,
Dan

Thanks, I changed the setting in Engine 2 so that it converts all samples to 32 bit, might have helped!