I too don't use this model (Duo-Capture EX in my case) but I suggest you first of all follow the Roland instructions for setting the input level on the Duo Capture itself (probably tweaking up the level control until the peak light just flickers then back off a tad). Then try the follow rear-panel settings -
The Input Monitor Off: in this case you will need to select Input Echo in the Sonar track to hear anything. The disadvantage is that the sound will be fractionally delayed (but in most recent computers and using ASIO drivers this will not be too distracting). The advantage is that you will be monitoring exactly what Sonar will record.
Hi-Z On: if you plug your guitar directly into the jack socket in the Duo Capture, otherwise  it should be Off.
Input Gain set Lo: play the guitar and verify that the track level meter registers a healthy dose of green bars. If not, try it on Hi. Proceed with whichever setting gives you lots of green but avoid constant amber or any red.
 
(Note that if you change Hi-Z or Input Gain you may have to tweak the input level control again. You may also need to make slight adjustments here to achieve a healthy signal on the Sonar track meter. Just make sure that you are not seeing the peak light at all on the Duo Capture.)
 
Then make a trial recording. At playback, keep an eye on the playback meter in the Sonar track. The meter should pretty much show the same levels as you saw at record, providing you have the track level (Volume) control set to 0. (You will only see the playback meter reading if you disarm the record button on the track during playback). Hopefully, you will now hear a pretty much perfect record of what you played.
 
If the playback still does not sound like what you played (or if the input monitoring set up above does not allow you to hear what you expect), then it may be worth checking the signal routing out of the PC to your ears, as I don't think you mentioned how you are monitoring playback.
 

Ok im going to try downloading and installing this all again on a different computer using microsoft windows xp sp3. How do I determine what ASIO i am using or what ASIO to use? Again I apologise for my seemingly stupid questions but I am 16 and have no idea about these things.

okay I can now hear a clear sound of my guitar live when it is plugged into the duo capture and my earphones are plugged into the (line out) of the duo capture. However when i click record on SONAR it shows that sound has been recorded however i am unable to hear it when i play it back.

I'd be surprised if you get better results by going back to XP SP3. In fact, I'd say that if you do, it just says that you have something wrongly set up in your current machine. Before you leap backwards, have you followed the method that I gave you in #11?
 
As for your question about ASIO, it may be that the somewhat about-face set-up pages of Sonar are confusing you. If you go first to the Audio Settings for Playback and Recording, you will be able to select Driver Mode ASIO. Then go to Audio Settings - Devices and check the Input and Output boxes corresponding to your Duo Capture. (Be aware that it will only appear if the driver is properly installed and the device is connected. So if the device is connected and you don't see the option here, it almost certainly means that the driver is not properly installed, in which case follow Roland's instructions accordingly. Also, as only one ASIO device can be active at any time, if any other ASIO device is already checked, you must uncheck it first.) Then go to Audio settings - Driver Settings and make sure that the Duo Capture is set as Playback Timing Master and Record Timing Master. A little further down the page, you can click on ASIO Panel ... . This will open Roland's applet for setting up the Duo Capture. Roland scales Audio Buffer Size from 1 through 10. I suggest that you start out with at least 6 (possibly higher) to ensure that stability is high. (Once you have achieved undistorted sound without drop outs, you can progressively reduce the value here to make the latency less distracting, but at this point your priority is to achieve stable recording).
 
Then follow the approach that I set out in #11. It might be worth simplifying your signal chain as much as possible, so even if later you intend to use amp/fx/channel or whatever between guitar and Duo Capture, for now plug the guitar directly into the input of the Duo Capture and set to Hi-Z.

Also everytime i strum the guitar the peak meter flickers red, it has never been green. Although the sound is very clear when i turn down the input volume slider.
 

If you're talking about the Peak LED on the DUO Capture, it only has red and if this shows at all, you should adjust the slider down progressively until the red just goes away.

On the question of no playback, can you see the waveform in the track pane? If not, you haven't actually succeeded in recording. Make sure that the track is armed for record before you press the record button next time. If you can see the captured waveform, make sure that the track is not muted, that the volume slider is set to 0.00 dB and that the track is routed to the Duo Capture Out and try playback again.
 
 

The roland is installed and it is recording but it wont let me hear the recording. At the minute my input volume is nearly at its lowest (I cant hear it very well through my earphones) and my roland settings are 
 
input monitor - on
hiz - on
input gain - hi
 
And this is the first time i have been able to hear the guitar clearly through the duo capture. I watched a tutorial on ASIO and selected the correct options (i think)

Also, although the input volume is low i still see the peak light when i strum hard
 

I can see waveforms and the track is not muted, which slider do you mean?