Thanks for all the replies and support.  To answer some:
1-Yes it did infuriate me that Sweetwater--a good company in general, by the way--let a trainer build my system and would have a second time had I not intervened.
2-Good ideas about trying another DAW or migrating everything to a new PC.
3-I could be wrong but I really believe this is a messed-up driver/registry/set-up problem.  Sweetwater built the system by installing 8.5 and then upgrading to X1 immediately before delivery and this was done by someone unfamiliar with the process.  When I got the system, Fantom didn't work (and didn't for months), many of the VIs/soft synths were messed-up, there were 32-bit set-ups for somethings and 64-bit for others, etc.  A lot of things have been fixed one-by-one over time, but no one every went back and rebuilt this correctly from the ground up.
 
One other **** about companies who build things:  ASK ME WHAT I WANT THE USER NAMES AND PASSWORDS TO BE.  I have a different log-on for everything: NI, Vienna, MusicLab, Sonar, EastWest, my PC, etc.
 
I am at the point now where if I can somehow keep going, and HAVE to get a couple of albums out the door before shutting down for a mjaor rebuild; but it is frustrating: any given day may be wasted on some dumb issue.
 
Thanks again. 

Beepster
@jimusic... lol. You should have seen me building my rig. I was so paranoid I was gonna break something I spent far more time double checking myself and my procedures than actually building. Open MOBO box, touch case, pull MOBO out of static bag set down on non conductive surface, touch case, reposition case, touch case, pick up MOBO by edges and dry fit, touch case, pick up screwdriver, touch case, etc...
 
At least my OCD tendencies came in handy for a change. I actually STILL touch the case or the steel legs on my desk or the coax poles on my power bar before powering up. I do get quite a bit of static in here though so it's not me just being crazy... mostly. ;-)
 

Hahaha! That was me exactly! Move across the carpeted room to get something - touch case! Unpack a device to install - touch case! Get screwdriver over on the other table - touch case! etc. etc   Hahaha!
 
Glad no one was watching. 
 
But you know what? - better safe than sorry, and everything worked out great.
Never any issues with my rig - rock solid!
 
My very first build & proud of it using excellent products that were current & top notch at that time.  Did my home work for over a month first.
 
Even now when opening it up to add a new component, still really careful!
 
+1 

I've said it before, but the VS-700 system with Sonar X1 was one of the toughest, craziest installs I've ever done, and I've done many.  There were so many driver and software updates, some of which had to be done in the right order.  The VS-700R firmware update was positively nerve-wracking (might check that, by the way, if you haven't...should be running v1.30).  The Fantom was quirky (took a special registry tweak to finally get running).  It was, all in all, a royal PITA.  But in the end, thank goodness, it all seemed to work.  That said, there are still sometimes odd little problems.  Nothing show-stopping, but I've also had a few of the things you mentioned; audio stopping and needing a reboot, for example.  Pretty rare, but highly annoying, nevertheless.  
 
It's such a great system when it's running.  I think it's definitely worth the effort of trying a fresh install, from the ground up.  But it's a daunting task.  Still, after all you've been through to this point, maybe it will go smoother the second time around.  One can only hope?
 
I think if I were in your position I'd be talking to Sweetwater very sternly (but nicely) about fixing my system.   And not a junior tech--someone who knows this stuff inside and out.   But then again, maybe you're better off going with a local expert, if you can find one.  I don't know...but my heart goes out to you.  Considering the troubles you've had, you must have the patience of a saint to have not thrown the system off a bridge by now.  :)
 
Good luck.  Hope this story has a happy ending.

Teksonik
Garry's got a good idea. Download Reaper and give it a try.  It's fully functional for 60 days I think and only a 9 meg download.  If you're still having problems then you can rule out Sonar as the culprit and you haven't spent a penny.  Then you can focus on other areas that might be causing problems....process of elimination.

Getting back to Konrad - this does sound like a good starting place, to make sure that it's the system and not just Sonar.
 
I'd wanna make sure that it wasn't even something like a bad install or corrupt download file, as some have had.
 
So if it were me, I'd do the Reaper thing first, since it's fast, small & free.  
 
[Looks like Jim R. has chimed in already for ya.]

Disclaimer: I'm not a tech nor a pro. I did however do all my installs myself and now make images of my drives in case of catastrophic failures. I've spent a lot of time researching and pondering this type of problem so I figured I'd toss it out there for you. I may be way off on some or all of this or completely ignorant on certain aspects. You may have already thought of all this as well but again it is very hot here today so I'm just kind of sitting here like a lump and it's a good chance for me to clarify some stuff I'm planning on doing for my own system. Feel free to ignore the following.
 
If you think it's because of a bad config/install it might be worth just wiping the system and starting from scratch. Just make images of all the drives using a program like Acronis so you can go back to the way things are. Also make a regular backup of just your project and audio files so once you have the fresh install up and running you can just transfer them all back into the system (you won't be able to get at them via the disk images AFAIK). You'll need a pretty large storage drive or multiple drives for what I'm assuming is a massive amount of programs and samples so maybe a SATA cage and some internal drives would be cheaper than external drives. I'd also say make two copies on two different drives if you can just in case one set of images is corrupted. A lot of those imaging softwares have a test function to make sure the image is good but still... better safe than sorry. You wouldn't even need high speed drives for this because it's just storage but if you picked up some Caviar Blacks or Barracudas then you have them on hand if you ever need to replace the current drives.
 
Once that's done, if you didn't get a copy of Windows with the system buy one. I'm using Win 7 Pro 64 and it's been working great. I bought mine OMF from newegg for around $120 IIRC. Wipe all the drives, reformat and install Windows. There are a bunch of vids on Newegg on working through the initial set up. Hunt down the drivers for all the components of the computer (you'll need to search the manufacturer websites using the model numbers). Before updating that stuff though do some google searches to see if there are any complaints about the most current drivers. If there are you may want to contact the manufacturer to see what's up or use the last known working version.
 
Create a restore point. This way you can easily get back to your completely fresh install. In fact maybe create a restore point BEFORE you start installing driver updates in case one of the updates is bad and you want to try another one.
 
Once that's done contact Cake support and ask them for specific details for optimizing your system for X2. They referred me to the Sweetwater optimization guide but there are a couple things in that that apparently don't play nice with Sonar so best to be thorough. Focusrite has a good optimization guide too and I seem to recall there being an SOS article on the subject.
 
Do some tests to see if you can catch any RAM, DSP latency, bad HDD, etc... issues. That way you can hopefully rule out the actual computer. Might be best to call a pro to point you in the right direction for this.
 
Now you've got a clean slate. I'm not sure what should be installed first at this point, the hardware drivers/software or the DAW but that could be something else to find out from Cake. Either way install Sonar and your interface drivers/software. Obviously make sure things get installed onto the correct drives which is again probably something to ask Cake support based on your system. Do some tests to see if things are working at that point.
 
Create another restore point. Actually create two. One after you install whichever you install first (the hardware or the DAW) and one after the other is completed. Now you'll be able to go back to either of those points if need be. If I understood the MS documentation on this even if you return to an earlier time using the Restore function you will still retain any data like project/audio files. It just gets rid of the programs and registry stuff... but don't quote me on that as I'm not certain.
 
Then start installing all your other goodies. I'd guess that the best bet is to start with your hardware in order of priority (what you use/need most) creating more restore points as well as tests each time. This way you can see if a specific piece of hardware or its drivers are screwing things up. If so try looking for solutions online or contact the manufacturers support to see if there are fixes or whether the latest drivers have been causing headaches for other users.
 
Then start installing your extra software in order of priority again making sure the right parts are getting installed onto the correct drives again creating restore points and testing each time. If something causes problems leave that program out until you can get some answers from support or find a solution.
 
Hopefully you'll have a functioning system after all that. All those restore points can be backed up to an external drive or discs if you don't want them on the system (I think). Be sure to name these restore points or number them and have a notepad document with a list of the numbers and what step you were at so you know exactly what's what. You may want to create another set of full drive images of the working setup in case of catastrophic failure (and you may want to create a few at other steps in the process).
 
That is ugly and time consuming but will give you lots of options for repairs and you'll have the benefit of knowing your system VERY intimately.
 
Again I am not a tech but if I were to do this that is how I'd go about it and in fact is exactly what I intend to do with my system some point in the future. Not because my system isn't working but because I kind of installed things in a weird way when I first started because I didn't know any better and because I'd like to toss a third drive on my system.
 
The easier and probably more effective way would probably be just to ship the thing to Jim or the ADK guys and get them to fix it up. Then try to send the bill to Sweetwater. Those rigs are supposed to just work but obviously something has gone awry.

Konradh,  sorry to hear about your trouble.  I'm on my 4th Creation Station and have had very little issues.  When I have a problem Sweetwater usually drives my computer for me and poof I'm up and running.  In 13+ years I've had one Sweetwater computer die on me when a power supply distroyed some hard drives, but that computer was 6 years old at the time and not my main source.  I'm still using the others for small tasks.
 
Anyways 15K is a lot of $$ for something that ain't right.  Good luck.  Hope things work out for you.  Wish I could give you some magic words to fix things,  but i'm technically not so good.
 

I would suggest that you purchase a new drive to install fresh on.  That way all you have to do is put the original drive back in if you get stuck during the reinstall process. Hard drives are not all that expensive and you just need to get one of similar quality. 

Konradh, have you gone up the food chain very high at Sweetwater with this.
Chuck is a stickler for customer service.
I work with a guy who's wife is VP of sales there.
Apparently she is Chuck's "right hand man" as it were.
I will talk to him about this and see what he can leverage thru his wife.

This is just not typical Sweetwater service.

I do know that Sweetwater Creation stations use a restore image to restore the whole computer back to defaults and if the restore image is not right to begin with, then yeah you are screwed...why I really don't like OEM's, etc restore process....
the best thing I can suggest since it does sound like a operating system configuration error is possibly(which would be cheaper than buying a whole computer, etc.) is to buy windows 7 professional yourself and do a complete format and re-install of the operating system and the programs yourself back on to the creation station and see if this helps...the hardware itself is pretty good in the creation stations computers.....
 

konradh
Thanks for all the replies and support.  To answer some:
1-Yes it did infuriate me that Sweetwater--a good company in general, by the way--let a trainer build my system and would have a second time had I not intervened.
2-Good ideas about trying another DAW or migrating everything to a new PC.
3-I could be wrong but I really believe this is a messed-up driver/registry/set-up problem.  Sweetwater built the system by installing 8.5 and then upgrading to X1 immediately before delivery and this was done by someone unfamiliar with the process.  When I got the system, Fantom didn't work (and didn't for months), many of the VIs/soft synths were messed-up, there were 32-bit set-ups for somethings and 64-bit for others, etc.  A lot of things have been fixed one-by-one over time, but no one every went back and rebuilt this correctly from the ground up.
 
One other **** about companies who build things:  ASK ME WHAT I WANT THE USER NAMES AND PASSWORDS TO BE.  I have a different log-on for everything: NI, Vienna, MusicLab, Sonar, EastWest, my PC, etc.
 
I am at the point now where if I can somehow keep going, and HAVE to get a couple of albums out the door before shutting down for a mjaor rebuild; but it is frustrating: any given day may be wasted on some dumb issue.
 
Thanks again. 

thanks everybody!
 
dxp, I have spoken to Chuck and the Customer Service Exec, although that was last year.  Sweetwater gave me a very cheap deal on the MOTU interface because one of their theories was that the V-Studio IO was buggy.  (I don't buy that theory, by the way.)
 
They tried very hard but I think the only answer is going to be a new PC with a fresh install.
 
I think Sweetwater messed up originally but I don't know that for sure and they have certainly hung in there with me, so no bad feelings.  I still buy a lot of stuff from them.