MIDI Latency issue

"MIDI latency" is really audio latency. The sound card is a problem. For real-time monitoring you need to be able to run the sound card at 10ms or less round trip latency. An audio interface designed for DAW use will improve performance. The latency can also be negatively affected by adding plug-ins designed for mixing and mastering while tracking. To see if plug-ins are adding to the problem, they can be toggled off/on with the keyboard shortcut "E".

An audio interface will take over all the audio tasks for the DAW. Whether the audio interface handles all windows audio is up to you. Some prefer to use the internal sound card for everything except the DAW, others disable the internal sound card and use the audio interface exclusively. In my case, I leave the internal card enabled and occasionally use it but primarily rely on an external audio interface for all audio tasks.

An audio interface takes over the audio tasks(A/D D/A conversion) from your sound card. In essence, it is a sound card, but with more sophisticated capabilities. You would be using it exclusively with Sonar in lieu of the built-in sound card.
If you are performing and recording live MIDI input, a proper interface is monumentally essential.
You will see that many of us have an interface of some kind listed in our signatures.
Depending on your needs( inputs, outputs, MIDI, etc), a decent unit can be had for $150 or more.
At the $250 mark, there are lots of options.
Look here for some ideas:
http://www.sweetwater.com/shop/computer-audio/audio_interfaces/
Understand that your DAW is a system. For to be at its best, the software and hardware must be able to operate at a higher level than basic PC requirements.
Spend some time checking out the specs on the various units. Your interface is a key component.
Consider your requirements, current and future.
In my laptop based scenario, the Akai EIE Pro was a perfect fit. On of the Focusrite Scarlett series may be a perfect fit for you.
And yes, it will get rid of your latency issues if you get a decent one.
 
Edit: basically what scook wrote

Is it still true that PCI audio cards still out perform USB and Firewire when it comes to latency?
If yes then I'd recommend and M-Audio Audiophile 24/96.
I know that they can run at 1.5ms even on an old single core AMD
and are very good sounding cards and have midi in and out. Possibly 2 of each. Can't remember for sure.

If you need more audio outs then I'd look for a used Echo Digital Audio Gina3G on eBay.
G3g has midi and also 2 mic preamp ins that are pretty decent.
This card also does 1.5ms with no problems even on a very old PC.

The reason for using a dedicated audio interface, rather than the on-board sound, is that there are massive amounts of data being converted back and forth between digital/analog, and the audio interfaces are explicitly designed to do all of that work with specialized circuitry, which means that the computer's CPU does not have to be burdened with all of that.
 
With NO audio interface present, all of that data conversion has to be handled by the CPU, which has a zillion other things to do, too.  By overloading the CPU, it falls behind in it ability to process all of this data - which keeps getting thrown at it.  The result is choppy playback, with lots of noise, crackles, pops, delays, and dropouts.
 
Windows can handle playing the standard Windows sounds and simple audio song files, or play YouTube videos, because those do not contain anywhere near the amount of data that you have in a Sonar project.
 
SOOOO - depending on the features you want, a decent sounding audio interface will start at around $125-$150, and go on up from there,  Mine ran $500, but it is because of the extra features on it.
 
The ones that run in the $150 range will usually have a couple of inputs (usually a combo input, that can take in either a 1.4" instrument cable or an XLR cable), and a couple of outputs.  Some have XLR outputs, some have 1/4" outputs, and some have both.
 
Look for something that has a couple of mic pre-amps and phantom power, which is used to power certain microphones.
 
Also, make SURE the interface has drivers for Windows 7, and should have them also for Windows 8 AND Windows 8.1, because some interface makers allow sometimes years to pass before building drivers for newer OS versions, and this can be a problem.  The Windows 8.1 drivers may not be out yet, but certainly Windows 8 drivers should be available.
 
Most USB connected audio interfaces use USB 2 ports, so make sure you have one available on your computer.  Some computers have only USB 3 ports, and these sometimes do not play well with audio interfaces that were expecting a USB 2 port.  My Presonus AudioBox 1818 VSL freaks out if it gets plugged into a USB 3 port, for example.
 
When you DO get an interface, I would suggest the following starting point for settings:
 
For the interface settings: Sample Rate of 44.1 k or 48 k, and an ASIO Buffer Size of 128
 
For Sonar: Driver Mode of ASIO, Sample Rate that matches setting of audio interface, Record Bit-Depth of 24 Bits.  Shoot for a Total Roundtrip Latency reported by Sonar, of around 10 ms or just a little less.
 
Bob Bone
 

I figured it was the integrated soundcard. Thanks to each of you for your answers and confirmation. 
 
I am thinking about the Focusrite Scarlett 2i4, it handles USB 3.0. However I am concerned that the preamps won't deliver enough gain(+55 dB max). I have two Fat Head ribbon mics and want to record an acoustic accordion, which I think needs about 65 dB gain.