I just got a new desktop PC cuz my laptop was giving me so much grief. I also have a 8TB Seagate external USB hard drive. I know music, but not computers, so please bear with me.......
 
My Sonar Platinum is installed on my C:Drive, right. So if I open a saved project from my external G:Drive into Sonar, is the project actually streaming from the external drive? Or does it just load onto the C:Drive, then stream from there? In other words, is the external just for storage of the project only or is it actually running the show while I'm recording/mixing, etc?
 
And is this the best way to do this?
 
Thanks for any insight.
 
~Jeff

Well, if it was me, I'd use that massive external just for backups.
 
Install another Hard drive or 3 in your pc.
 
OS, & programs on your C drive
Cakewalk projects on one of your new internals and if you run a fair number of sample libraries, move these onto yet Another drive.
 
Or, if your current OS is on an SSD, consider if it's big enough to house your sample libraries as well for best performance

You have some control over where Sonar is saving your audio files. If you are using per project audio folders, then yes, if those folders including audio files are stored on your external drive that is where they are being accessed. That will result in "streaming" i. e. reading and writing to the external drive as you record and process in Sonar. That may be problematic if the data transfer to the external drive is slower than you need. If you are not having any problems, this may be a nonissue. BJ is giving the standard advice that real time audio is best stored on a medium with the fastest access, typically an internal drive, but with USB3 and eSATA externals this may be less of a problem than in the past. 
 
Audio is in general stored separately from the project file in Sonar, so it is possible that your project is stored on the external drive yet the audio is stored on a system drive. The easy way to  find out where your audio is stored is to open the Project/Audio Files dialogue. If it turns out you have your audio files on the C: drive (or another directly connected SATA device), then that is good news for the speed of access, but maybe not such good news for your project backups and saving, since you need to be sure the audio is included with backups of the project.