CakeAlexS
I was going to recommend renaming aud.ini (search google for details) but Scooks suggestion might do the same thing.

and what I also said...

Can you check if you have issues with new projects (not using any template)?

I also recommend running windows update several times (including optional) in case of library issues (such as C++).

Thanks...

I will, but I am done in this evening and the Missus is sort of antsy...I will try this tomorrow and check back, OK?  Exhausted from screwing with this, but TOTALLY appreciate all eh help guys!

Give my regards to the missus ;)

Cheers.

OK, a little sleep has helped.  I ran the Wave Profiler which seemed to set the audio settings into WDM and things worked.  I then checked the preferences and flipped over to Asio and success!  However, this experience has me wondering a few other things now, since I have near zero experience with SONAR thus far:

1. Since I started at SONAR X2 Studio, then bought and installed X2 Producer and the X2c update and lastly installed X3 Prod with X3e and these are all now installed -- would I be best served to uninstall all of that, and just install the X3(e) Producer?
 
2. When I started, I took the defaults which put my Cakewalk/Projects folder on my system (C:) drive.  I want my projects on my Audio drive (E:) and so I changed this (I think) but there are SO MANY directories and I am truly not sure where things are, and where they are going.  Is there any straight forward guidance on this, or am I overthinking this?
 
In any event, I have to say that as compared to Reason which set up everything the first time and has never even burped -- this is some complicated stuff by comparison.  SONAR may well be far more capable however, so I am going to stay with it.  But last night, I spent 100% of my time dicking with drivers and ini files and 0% of mytime making any music.  I'd like to get past that soon, if possible.  Thanks to all for the patience and the help.

1. Don't uninstall previous Sonar versions, they each come with some potentially valuable content that isn't in any of the others. The actual unique Sonar version program files aren't very big at all. That said, if you feel it's messy and you want to "start over" you could remove everything, do a custom install of X2 and only install the basic program (to get V-Vocal in X3) and R-Mix (which isn't in X3). I think those are the only unique ones you'd otherwise miss. But again, space wise it doesn't actually make a significant difference.
 
2. I tend to do the same thing and also keep "additional content" off my system drive, that is, anything that's labeled as such during installation. None of the default stuff like project templates is very big. The most annoying exception is Dimension Pro which always installs a large amount of samples on C: even if you tell it not to, and there is a whole page of instructions on how to move them. Personally I've grown weary of this stuff so I gave up and left them.
 
I agree that Sonar, compared to Reason (or Ableton or Logic and perhaps others), is relatively finicky to set up with complicated looking preferences too. There was a thread about that recently actually. It is a great program though and once you have it set up to your liking and discover how easy it is to comp, use Melodyne, or save and insert multi-track templates you won't want to go back!

I had no issues setting up X3 myself going via X1 and X2. I think you had a hardware configuration issue, and that's the only time I've had trouble too.

Ta.

It does sound more like a breakdown in communications between Sonar and the audio interface compared to some internal problem within Sonar. One area where IMHO the Mac has it all over Windows is Core Audio, which is universal and predictable. Although it's great you didn't have issues with Reason, install enough Windows programs and eventually you'll run into some Windows hiccup. Many times it's due to other elements of Windows trying to take control of your sounds and conflicting with the program you want to use.

As far as the folders go they are very easy to assign in preferences / folders once Sonar is up and running. Just do it before you start new projects.
I know it's a long list but most do not matter. I only change the Project File path to the top directory of my Audio Data drive. This way when I click "open" it take me to where all my active project files are stored. From there I will select which sub folder "album" I'm working in. I don't want Sonar telling me where stuff goes.  
 
The rest on the list is easily changed too but myself I just browse to the locations for thing like export songs. Templates are left where they are but I will back them up to a data drive. 

Yeah, I know Windows is wonky at times...I code it for a living actually, although mostly in SQL Server these days.  In any event, what was jerking my chain was that things worked fine in X2 Studio, X2c Producer but not X3e Producer -- even though the preferences looked the same under cursory inspection.  When I ran the Wave Profiler, it set it to WDM and things worked again.  Then, I simply flipped the device driver over to ASIO/triangle and all was well.  I am trying to slog through the 38(!)mb manual to get a sense of installation and preference options now.  A little light reading, as we say at work 

In any event, I truly appreciate everyone's input and patience with my "challenged" attitude last evening.  Much yet to learn, but one advantage I have seen in SONAR town ios a happier population which is a blessing.  The Reason community is very fragmented and angry by comparison over the recent R8 release (Lord knows why), but I digress again.  Looking forward to music making by checking out the synths, strum collection and other things that make my inner musician's mind boggle -- sort of like looking at the cockpit of the Space Shuttle the first few times lol...

johnnyV
As far as the folders go they are very easy to assign in preferences / folders once Sonar is up and running. Just do it before you start new projects.
I know it's a long list but most do not matter. I only change the Project File path to the top directory of my Audio Data drive. This way when I click "open" it take me to where all my active project files are stored. From there I will select which sub folder "album" I'm working in. I don't want Sonar telling me where stuff goes.  
 
The rest on the list is easily changed too but myself I just browse to the locations for thing like export songs. Templates are left where they are but I will back them up to a data drive. 

Fortunately, I am just a hobbyist starting out but one thing a pro coder knows is that proper organization is everything later on down the road.  Everything I have thus far done is throw away or demo anyway.  Thanks! 

scook
The wave profiler is used for WDM driver mode. If you are using WDM run the profiler. Check the driver mode, it should be set the same as X2. Assuming X2 is working properly.

This ended up the answer, more or less.  Kudos....