Here is what I found and hope that I am on the right track, you let me know, because I am confused with the different SW or product references, as I don't use pyro or tdk or audio creator. All of this was on Cakewalk's website. See the bottom for the AUD.INI stuff. I'm getting Dropouts or 'stutters' during playback. The information in this article applies to: pyro Audio Creator pyro Audio Creator LE TDK Life on Record Vinyl Recorder Note for Audio Creator users - download the latest version 1.5.2 Audio Creator patch or Audio Creator LE patch. Whenever there are audio dropouts or stuttering issues, you can usually fix that by changing the driver mode from MME to WDM or vice versa. If you have an after market audio card or interface, try ASIO mode. Click here for the Audio Interface Setup Guide. Please click the "Options" button in the main Toolbar. If in MME, a larger buffer will be more stable, the same goes for WDM; however, a multi-core system may like working with a smaller buffer (towards the fast side) in WDM mode. We find 2 buffers to be quite stable, but if you still get dropouts, 4 or 8 are options. In Vista or Win7, go to the Control Panel | Sounds, click on the Recording tab. Highlight the USB Audio Codec and click Properties. On this page, click on the Advanced tab. If Audio Codec defaults to the microphone as a 1-channel device, instead of a 2-channel device, try switching it to 2-channel. For the stuttering playback or monitoring from your LP player, make sure it is not connected to a USB hub, but rather plugged directly into the USB controller. Also, if there are any webcams or other USB devices like that, temporarily unplug them. If switching driver modes doesn't do the trick, the AUD.INI file may be corrupt. To wipe it out, go to Start | RUN and type %appdata%/cakewalk then press OK. Click on Audio Creator and delete the AUD.INI file. The next time the program launches it will rebuild the file with fresh driver information. Relaunch and try recording again. This page last updated: 4/13/2011

Don't bother with MME. You have a quality audio interface that should give you good results using ASIO. ASIO adjustments are made using the software provided by motu. That is the first thing you need to get a handle on.

You can delete the AUD.INI if you want to go back to the default setup; better to rename, if you need to get the old one back though. The AUD.INI is rebuilt on startup if it is not found. Resetting the AUD.INI will set DropoutMsec to 250ms which may be too low.

The SONAR help/documentation has a troubleshooting section that goes into quite a bit of detail on how to handle dropouts and stutters.

  I will play with the interface settings and then move onto the AUD.INI. As far as renaming, do you mean that I should rename the AUD.INI to OLDAUD.INI and then is will still be there should the newly created one (after a reboot) not serve me well. Then I can just delete the new one and change the name back from OLDAUD.INI to AUD.INI with no hassle or damage...right? I will dig into the interface settings first thanks.

Yes, that is the point of renaming AUD.INI. I do not believe you need to re-init the file but it won't hurt. You do need to think about changing the DropoutMsec value though.

  O.K. so help me to understand. I can change the value of the DropoutMsec? What should I expect to see for a default value and what should I change it to and what does increasing or decreasing the value do? Does a higher value mean more buffer or a lower value? Which is the direction I should be going in to solve my problem of dropouts while recording? Thanks scook.

I think it defaults to 250Msec.

Try it at 500 or even 750

Jonesey is correct about the values. The best explanation of what DropoutMsec does is in the documentation:
Under high system load conditions, the SONAR audio pump mechanism may become starved. When this condition is detected, SONAR drops out. The DropoutMsec variable allows you to configure the tolerance time in milliseconds. This variable applies to all driver modes.
Setting DropoutMsec to a positive value > 0 specifies the actual time in milliseconds to tolerate before dropping out due to starvation. Setting DropoutMsec to a negative value < 0 means we use a multiple of the audio buffer size as the tolerance. i.e. -2 means we use twice the audio buffer size. Note that setting this value too low (e.g. 0) can result in more frequent dropouts in the program. If you notice too many dropouts, try raising it in buffer multiples or by explicitly specifying a millisecond value

You also need to adjust your latency with the motu software. You should be able to find a sweet spot between 128 and 512 buffers that should work for you.

You also could do yourself a favor and review the troubleshooting section of the user manual. It covers a few other things that might be adjusted to smooth out your performance issues. We can go over those if you still have problems after adjusting the motu buffers and the AUD.INI adjustment.

  Thanks Jonesey and Scook. I will try that. I reviewed the manual and setup for Motu and Sonar a optimized months ago. I will say that I have had some bad practices with my usage that might contribute to this problem and have since changed this practice. For example I never shut down my interface. I never remove the external HD the way it should be removed "safely". I just shut down the laptop and unplug everything and take if from and to the rehearsal space and mixing studio. I do shutdown the interface when moving it but never once it is in place at either location. I noticed this and at the last rehearsal I shut down everything and rebooted and I did not have any "stuttering or cd skipping" problems. I only had the dropout while recording, which required me to hit the record button again. So I think I am on the right track and AUD.INI may be corrupt and certainly my Motu latency could be adjusted. The funny thing is I never had a problem and then I optimize my system and problems started. I changed my Motu latency from 512 to 1024 and maybe that is alright, but I will change it back and also follow the other suggestions from you all. Thank you so much and I will report back. I stripped down my mixing studio so I am in the process of putting it back together so I am sorry for the delay in updates for the white noise.

If the problem was not apparent before the system was "optimized" that begs the question, exactly what was done to optimize the system? Can you undo the optimizations? If you need to set the buffers 1024 that is OK. It is possible to set the buffer value too high but you are well below that value.

  I followed Sonar's instructions to disable wireless card, internal sound card, anything that would run in the background, power management, anti-virus s/w, etc. I also set latency or buffer values and to use an external HD for all projects. Not much else really. I think my poor practices may have led to some problems and maybe a behavior modification on my part and some minor changes to the buffers and AUD.INI might solve these issues. So I will make these changes and then post an update, again, thanks so much for your help to everyone..