You were right the first time. It
is MIDI Volume (CC7), not velocity. In order to control MIDI volume on a track in SONAR from hardware, you either need to set up your keyboard as a Control Surface (see the Reference Guide for details), or enable Remote Control of the individual MIDI track Volume widget by right-clicking it, choosing Remote Control, and setting it to respond to CC7.
Also, if the 101 has parens around it, then the control is disabled (the default state), and you'll need to move it once via the interface to enable it (or right-click and
uncheck Disable Control).