Sonar 8 and live recording with effects

  I do not do a lot of live recording, I mostly use VSTs and external instruments. I recently upgraded my system and bought a Steinberg MR 816x audio interface. When I plug in a mic and record into Sonar I now have to turn on "Input Echo" ON to hear FX inserts.  Is this correct?  The only reason I ask is that when I turn the effect (let's say reverb in this case) mix to dry, or when I do not have any effect inserted but still have the "Input Echo" ON, I hear a tiny bit of latency, almost like a mild flanging effect.  Obviously when the effect is on you cannot hear this latency, but the fact that it is there as a result of switching on the "Input Echo" makes me wonder if it is having a deleterious effect on the added effect!  I hope this makes sense.

Playback sounds great by the way, so that's not a problem.  I am just wondering if it is 1.  normal to hear this mild latency when you switch "Input Echo" ON, and 2.  is this really the right way to hear the effect while you are recording and want to have the effect (not record the effect though).

THanks,

Mike