That's not entirely correct CJ
If you record through "In1 Left" to a stereo track you'll get a recording on the left side of the audio track and will not hear anything on the right side. If you pan to the right, it will be silent and if you pan to the left, you won't experience any difference. If for some reason, the same signal is recorded to both the left and right channel so you have sound in both speakers, which was absolutely possible with eg. the soundblaster, then you can still pan the track like you can pan any stereo track. Also, when selecting a mono input on a track, Sonar automaticly set the channel to MONO. This can of course be overrided if you use a stereo VST insert at some point.
So to me, this sounds like either the Master bus or some other bus he's routed the signal to is set to MONO. Then you'll have that effect, that when you pan, you only reduce the volume of the recorded signal in both speakers.
I don't know much about the audio interface in question so perhaps Wookie is actually the one with the correct answers here. But my cent is on the Stero button. If I recall correctly, the interleave button (marked with something that looks like Ø) is called the interleave button in the tool tip when hoovering over it with the mouse. changing the state of this will off course not remedy this at all. What you should look for is one of the buttons next to the interleave button on the Master bus or a bus you are sending your signal to that says Stereo/Mono (or something like that - not at my DAW atm) when hoovering your mouse over it and make sure it is blue. Then you can try to pan your track.
My point is, a track can be paned no matter what format it is and you should hear it. At some point the output is summed in MONO and this is your problem, whether it is inside Sonar or in the setup of the audio interface. This is what I would investigate.