I finally got a response from Celemony. The problem was I didn't have the latest X3 update.
This is Celemoy's response.
"Dear Remus,
thanks for sending the video.
I can reproduce this issue here on my machine, if I use an older version of Sonar X3. But with the latest release (Sonar X3e) I can use Melodyne in ARA mode without problems. Are you using this version or maybe an older one?
Best regards
Tom Bratka
Celemony Support"
Thanks to everyone that helped.
Remus