If your M-Audio interface is working well with Audacity there is a very good chance that it will work with Sonar. The issue with Win 8.1 is typically drivers, but that is an OS issue most often, and not application specific.
 
X3 Producer is a cheap way to buy a bundle of synths and effects. If you are not using synths or effects, it is probably not worth it to pay the higher price. If you are just trying to record, Audacity is pretty good for an unbeatable price. If you want to do heavy editing and massaging of your sound, then a more complete suite will show its value in time. The synths bundled with Producer are fantastic, but if you are just doing audio recording and editing, they are of no real value to you. The producer effects are good, but until you have some experience with using effects, the simpler ones in the lightweight versions will be good enough to start learning what they do and make some more than decent music. Starting simple and moving up when you actually have the need is a good way to get into the program. If you find you can't stand to use Sonar, it is less painful to write off a smaller investment, and if you find you love it, and learn to appreciate what you will get with Producer, you can justify more money on the next version.

It's a personal choice, but I agree with slartabartfast.  Start small and work your way up.  As an amateur I started with Home Studio (years ago) and then, since Cakewalk has always had a good upgrade program, worked my way up to Studio.  There is a learning curve so, in my view, it's better to buy a more affordable package and then invest in a copy of Sonar Power. 
[Kickbacks from Garrigus not expected, but, if offered, would be ungracious of me to refuse.  ;-)  ]

Well, it all has to do w/ what you intend to do.  Recording - the $99 version will do.  However, if you plan on mixing, the Pro bundles a lot of good tools.  At some point you'll want an 1176 comp.  A comp to use on the bus.  Good EQ.  Good reverb.  SONAR Pro will give you all those at a good price.
 
If you are into synths, the cost/benefit relationship is even better w/ Pro.  Rapture, DimPro and Z3TA are all first class synths and will keep you busy for a long time.
 
So it all depends upon what you see yourself doing.  If you ain't sure, get SONAR X3 (the $99 version) and see what you end up doing.  It would be cheaper to get the Pro version if you start mixing, but even w/ the cheaper versions Cake lets up upgrade inexpensively.
 
@

BTW - the only down side of upgrading to win 8.1 that I can think of is you must login to your MS Account to use SkyDrive, you can't use your local account to you SkyDrive, unless you install 3rd party tool that maps your SkyDrive as a Network Drive.

I also want to upgrade to producer just for the extra synths, but I'll wait until I am proficient at using them. I also have some old PC hardware lying around that still needs to be ebayed that can cover the final upgrade cost, so I'll start trying to do that.

I started with MC6 for £35, then the base X3 upgrade was just £39.99, so that was £10 less than buying it as a new customer. Then I had the £10 voucher that got me X3 studio down to £64.99, but finally producer costs a huge £239, so buying that this year instead of more computer upgrades is the plan. And I didn't want to miss out on the Melodyne editor offer either, that was another £125.

Still a lot less than Pro Tools though, and X3 looks fantastic and has a very modern UI.

I learnt that just trying to record onto audio tracks didn't work well for me, it took me too many takes and there were too many inaccuracies, and I wanted midi editing and accuracy, and the synths are really good, but just take a while to learn.

Sonars Pro Channel is what we used to call a channel strip on old analog desks. It is like a very tightly integrated fx bin in each channel and can have some very specially created plugins installed. They have low CPU overhead and are available on each channel and can be completely hidden. It's worth the cost of admission to any Sonar version that includes it. Some of the Pro channel modules are extra purchases and not included, not even with. Producer.

Windows 8 was on my laptop when I purchased it. I updated to 8.1 yesterday and everything is better than fine! Seems like 8.1 is a bit snappier. The only issue I had was after the update my XLN products, Addictive Drums and Addictive Keys snapped back into demo mode and had to be re-registered. I just went to the XLN site and removed the laptop in my account that just upgraded, re-ran the XLN installer and re-registered the new computer number and I was good to go.
I made absolutely sure that all my interface drivers and updates were current before the update. So far, this has been the least painful Windows update so far.

Thanks for all the input!
 
I went with Sonar X3 Studio.  I am very pleased, but I'm starting to notice that there are key items I'm missing from the producer version...
 
What's strange is that on the box, it says that I only have two ProChannels, but I've been able to add more than that...  Which is cool because I love them!  I wish I had the Analog Tape Module and the Vocal Stripper but beyond that, I'm pretty satisfied with what it has to offer and it's strong enough to suit my current needs.
 
Works like a charm on Windows 8.1! 

It means you have 2 of the 8 ProChannel modules that are available from Cakewalk. You can use the ProChannel on every track of a project.

To buy the modules separately would cost nearly as much as the upgrade to X3Producer.

Ahhh...  But I seem to have lots of ProChannel Modules - definitely more that two. I have the Console Emulator, Breverb, Compression, Saturation, EQ - perhaps some others that I haven't used.
 
Besides the Tape Emulator - what's missing?  It does seem that there are some functions missing - like the spectrum analysis in the EQ, that sucks!  Big time...  Almost a deal breaker for me because there is no spectrum analysis at all in the Studio version.
 
I'll probably end up upgrading at some point.