I was previously using music creator 6 along with an X-Fi titanium HD soundcard and a Yamaha DGX 630 connected via headphone out to microphone in on the soundcard.
 
First I bought and installed the basic version of X3 upgrade, and everything was working the same and all my previous recordings were playing back without needing any tweaking, so I uninstalled MC6 and everything was still fine.
 
But after buying and installing the X3 studio upgrade (and uninstalling regular X3), I started getting heavy distortion when playing my piano through the software, and also had loud feedback with the volume turned to full in windows and on my headphones.
 
So I tried reinstalling the latest drivers for my soundcard (after using driversweeper to clear the previous ones), and now I get no sound from the piano through to the PC, and when I try to play any of my recordings in X3 studio, I get an 'Unable to open audio playback device. Device may not support the current project's audio format or may be in use' error message. 
 
The fix is prbably something simple, but I cant find it. I tried looking through the preferences already, but couldnt find anything similar to MC6's microphone input settings.
 
X3 studio does recognise my piano as a midi controller through a USB connection though, but Im not getting any audio connection.

What do you see in the audio devices settings in your preferences. You may not have the audio portion of you interface enabled. You may need to reprofile your sound card too.
 
Make sure that you do nt have Windows using the sound card as a default windows sound device. Often in ASIO mode, you will not be able to use a sound card in more than one application at a time.
 
I would start at your audio device and driver settings in your SONAR program preferences.  

I managed to mostly fix it, the devices list in Sonar was was too empty and only had a few front connectors selectable, but none of the actual back I/O ports on the soundcard.
 
I installed the control panel software for the soundcard and was able to select the microphone channel for the input through there and the piano is working now and the distortion is gone, and this also added all the rear ASIO inputs and outputs to the preferences in Sonar.
 
Now I can record and playback new audio tracks from the piano, but I still cant open any of my old ones that I recorded from MC6 and am still getting the same error message. 
 
 

I get an 'Unable to open audio playback device. Device may not support the current project's audio format or may be in use' error message.

It's your sound card or lack of a sound card. Those SB cards are terrible. You may need to manually select the correct sample rate before staring new projects.
 
This is not a Sonar problem. Its a sound card problem. If you update your sound card to a recommended one, you wont get this issue. Most professional sound cards can change sample rates automatically to match projects. yours cannot!
 
CJ

It seems that there are ASIO drivers for your sound card.
 
1.  Are you set to a driver mode of ASIO in Sonar?
2.  What are the Sample Rates set to for both Sonar and the audio interface?  (They must match)
3.  What ASIO Buffer Size are you using as set for your sound card?
 
Bob Bone
 

I agree on the diagnosis of mismatched sample rates, and concur on the recommendation that the OP pick up a dedicated audio interface.
 
A reasonable audio interface will run from around $150 on up, depending on things like inputs/outputs and quality of converters and pre-amps and such.
 
BUT, in the meantime, please review my other post above and see what happens there.
 
Bob Bone
 
 

I just checked in my soundcards control panel and it is able to automatically switch its master sampling rate between 48 and 96 kHz (recorded a test session in 96 kHz, closed Sonar, changed setting to 48, reopened the project and the soundcard automatically changed to 96 kHz).
 
And all the drivers are Asio. Im sure the problem is with my soundcard setup somewhere though.
 
Another annoying issue Im now having is that whenever I try to record a track, it also records the metronome and any audio from other tracks. I tried turning off creative's 'what you hear' thing which is usually the cause of this, but its still happening.
 
I wont be able to afford a new audio interface now either, as I also just went and paid for the melodyne editor upgrade for $149. I'll just keep on tinkering and see if I can fix it somehow.