Just to update.
It is confirmed from Cakewalk technical support that the problem is coming from 'Dorchester' update.
This is a quote from email I received from Cakewalk technical support.
I tested your procedure and found that this does indeed occur in the latest (Dorchester) update only. I have forwarded this information to our development team so that this can be addressed in a future update of SONAR. However, for now, I would recommend that instead of using the Record button in the middle of playback, you simply click the Record button (or press "R") from a Stopped state
Hope they will resolve all the bugs from 'Dorchester' ASAP. It is kinda frustrating.