I can't see your posted picture ... and having used VS700R direct monitoring for several years, I don't really understand why it's such a mess in your case.
If you need to engage "input echo" on the vocal track in Sonar, you will be monitoring via Sonar FX (i.e. including all plugins that are in the project, even if they are not on that particular vocal track). The lowest ASIO buffer possible you can run your project on without crackles determines your actual latency. So your latency depends ...
- first of all on the plugs you use (and some are really bad for latency despite sounding great, e.g. WAVES Abbey Road Plates, some IR reverbs, ... some are absolute no-nos when tracking like linear phase plugs)
- next important is your audio driver. VS700R is OK but not top, even with a strong DAW you will not be able to go below 8ms RTL, even in light weightprojects ...
- Sonar is only third in line (try disabling all FX with the global FX button, and what will remain is only the latency from your audio interface) ...
Direct monitoring just means using the VS700 IO application (which you can also trigger from inside Sonar, I believe with VS700C buttons COMMAND+IO EDITOR), bring up the fader of your channel, unmute AND select the proper output at "DIRECT MIX OUTPUT" ... now your mic signal will go through the preamp, the DSP compressor (if you use it) and then directly out to your MAIN, SUB or DIGITAL1 output. There is no way that this can screw up your internal Sonar routing as this has nothing to do with it.
What you will get with direct monitoring, however, is only the try signal, which the vocalist may or may not be comfortable with, but I have also used hybrid monitoring where I had the direct signal from VS700R direct mix plus a reverb tail from a Sonar reverb bus (where latency becomes rather irrelevant since it's just the reverb tail and not the entire vocal signal)