So far I've had no response from Cakewalk support. After installing X3e Producer 64 bit, I'm getting the "Midi devices are not set up properly" warning again. The Fantom Editor comes up with the proper patches for the project, but plays only true piano sounds. It is necessary to open the set up Midi devices window and open and close all 4 slots. I can then load the proper saved instrument and it works right. I'm wondering if uninstalling and re-installing the stand-alone X64 version of the Fantom Editor would fix the problem.

I think you need to have another look at how your MIDI ports are setup inside Sonar. There should not be a problem in X3e using Fantom via Instrument Track or MIDI+AUDIO tracks. Have it working here ever since I got it (64bit X3e on 64bit win7) ... with Fantom only playing piano (default sound #1) it is not receiving the MIDI msg that would adjust the settings on the external VS700 fantom. I would recommend having a clos look at the original VS-700 setup manual plus the view articles in the Cakewalk support knowledge base.
 
As a side note: when upgrading to Sonar Jamaica Plain or later the instrument track option will no longer work due to virtual patch points being created going into nirvana rather than external VS700 fantom