This seems straight forward to me. The computer specs are definitely outdated and certainly below what is needed for hi sample rates, high track counts and any fancy processing needed if using a bunch of plug ins. 
You should have no problems if you optimize your system and run at 44.1 or 48. 
 
Also run Latency Mon which like the loop back test, I think is mandatory for setting up a DAW. 
http://www.resplendence.com/latencymon  
 
You can also run DPCLAT test on Windows 7,  won't work on W8. I like it because it's more visual but it doesn't tell you why like the resplendent test does. 
http://www.thesycon.de/deu/latency_check.shtml
 
Also that offset equals issues with your tracks not lining up perfectly. Myself I would add the manual offset and get it closer. We've all been messing around with this and I think it's critical for syncing to be as close as possible for good recordings. Especially if you are using audio a lot for things like bass. Midi is quantized so doesn't matter. 
 
http://forum.cakewalk.com/Lets-all-TEST-our-Interface-driver-for-offset-m3178396.aspx
 
 
 
 
 
 
 

Cactus Music
Midi is quantized so doesn't matter. 
 

 
Just a point of clarification: It's not quantizing that makes record latency correction unnecessary for MIDI, it's that neither MIDI input nor soft-synth rendering are subject to audio input/record latency, and MIDI input latency is fixed at a relatively insignificant 2-3ms.
 

Thank you to everyone. There's a ton of great information here that should help anyone with latency issues.  I know that I'm bookmarking it in case anything else comes up around the issue for me. For now I seem to be in great shape with just dialing back the sample rate to 48K. Everything is stable. The project I was working on was the only one that i had at the higher rate. I was planning on re-recording the 3 audio tracks anyway, so I deleted them and I was able to reset the sample rate to 48K. Everything is working smooth as silk now. I'm going to see if I can upgrade the memory in my computer. As usual it's always a question of cost.

Cool. Go make music!
 
Depending on its vintage and design, your motherboard may not be able to accommodate more RAM. But I wouldn't worry about it. My old workhorse desktop runs great on 4GB. Extra RAM mainly helps with loading lots of heavyweight plugins. I haven't yet built a project that runs into problems. Upgrading to a quad processor would probably yield a much more noticeable performance improvement. Should be piles of used quad machines out there that you can pick up for a song (pun intended).

brundlefly
Cool. Go make music!
 
Depending on its vintage and design, your motherboard may not be able to accommodate more RAM. But I wouldn't worry about it. My old workhorse desktop runs great on 4GB. Extra RAM mainly helps with loading lots of heavyweight plugins. I haven't yet built a project that runs into problems. Upgrading to a quad processor would probably yield a much more noticeable performance improvement. Should be piles of used quad machines out there that you can pick up for a song (pun intended).

Good to know. I haven't run into problems yet but when I do I will certainly look into the used ones. Thanks again!