Prior to X3 I used to build up midi tracks a layer at a time on the same track and all layers would sound together. With the advent of X3 the default behavior is to only sound the most recent take that does not overlap another clip. My understanding is that if record sound on sound was selected in recording preferences, the program would revert to the pre-X3 mode. This is apparently not the case. The first track I record will play all layers for the first four layers, but then, on the fith pass, only plays the last take. Subsequent tracks only render in the comp mode. If I drag takes to a new midi track they make no sound. I'm using X3d and confused. If anyone can explain my misconception, I would be most appreciative.

Sound on Sound MIDI recording should be working as expected - hearing all takes during and after recording. Double-check the record mode, as it's per-project, and having set it in one project won't change how other projects or templates behave. Also, if you have punch enabled as well, make sure it's not set to Mute Previous Takes as this will override the default behavior of the record mode.
 
EDIT: Just remembered there's an issue with Input Quantizing that will cause some or all notes from earlier takes not to be played back while recording, but that issue goes back several some versions and would not affect playback after recording stopped.
 
 

http://forum.cakewalk.com/I-still-dont-like-Take-Lanes-m2940872.aspx
 
Some of these issues may be resolved in X3D but no confirmation yet.