OK, So I have gone into preferences and made sure the box for "mute previous takes" is not checked and yet it mutes them anyway. This is driving me nuts. Any Ideas?

I have just the opposite problem sometimes!  Odd situation.

I always have to refresh my memory on this, but one of the keys to getting the result you want is understanding the difference between a "take" (i.e. what you record in between starting and stopping the transport), and a loop-recording "pass" with the transport running continuously.  When loop recording, it's really all just one "take" with each "pass" displayed in a separate lane, so you will get different results, depending on the scenario. Also, there are differences in the way MIDI and audio recording work in these two scenarios.

So to figure out exactly what behavior to expect, you'll need to start by describing what you're recording, and how you're monitoring it.

Did a quickie test, and here's what I got.

With "Mute previous takes" enabled:

MIDI - Both existing takes and loop-recording passes are muted in the punch region.

Audio - Both existing takes and loop-recording passes are muted in the punch region.


With "Mute previous takes" disabled:

MIDI - Both existing takes and loop-recording passes are audible in the punch region.

Audio- Existing takes but not loop-recording passes are audible in the punch region.

So what I'm seeing is that everything is pretty much as I would expect, intuitively, except for audio loop-recording "passes" not being audible when Mute previous takes is disabled.
 

So if ChuckC is loop-recording audio and not hearing previous "passes", I can reproduce that behavior, but it may be working as intended.

Hope I got that all right, both in the testing and the writing. 

Thank you for your input here.  Though, There has got to be something else that can effect it.  I am not looping or recording with a loop going.  I am for instance:  trying to punch in a guitar part but I want to hear the previous take (I can slip edit it out before wherever the mistake was) so I can make sure I match the dynamics etc.  but I can't hear the previous takes.
 
  On Midi: the only thing I use midi is when recording my drum tracks.  I play them on a roland V kit, monitoring the V kit sounds via a PA system.  Though I want to be able to hear the existing tracks (previous take) playing back in my cans.  This isn't happening either I I have the "mute previous takes" unchecked.  So you see my aggravation here?  I am a little stumped as to why?

Sounds like you may have muted the clip. Try selecting it and press K.

Alright... Here is what I have been able to figure out and you guys should be able to reproduce it too.

If I arm a new track & record (take 1), then add a new lane & arm that lane (so the new take goes there rather than in lane 1) 
I then cannot hear take 1 while recording take 2.  Additionally, the wave form (while recording) shows in red in the track and does not appear in take lane 2 until I stop recording it.

If I arm a new track & Record (take 1) then simply hit record again (to record take 2), I can now hear take 1 while recording.  the waveform shows in red in the track  and when I stop recording it then moves take 2 on top of take 1 in take lane #1.  I can then create a new take land and drag it there.  At the moment it appears that's how it has to be done.

By the way I also noticed... If you attempt the above while trying to use Auto punch all of the above behavior changes.?    And when I tried it while loop recording it would not record anything at all that way.  I could care less as I have never used loop recording but, it bares mentioning.

If you check "Create New Lanes on Overlap" in the Record preferences, the new take will go in to a new lane automatically.

I can confirm that arming a specific take lane for recording causes existing takes to be muted unless Punch is enabled. Hard to say whether this is intended or not. I've never tried arming specific lanes because using Sound on Sound mode with New Lanes on Overlap enabled takes care of everything for you.

"Armable" lanes has definitely added a level of complexity to something that was already a little unpredictable. 

Solo everything you want to hear.