P.P.S. Funny high pitched sound is gone when I use direct monitoring so it's not in the actual input signal.  And again, there's this funny gating behavior where the volume of the high pitched sound is following the volume of the bass, only in the digitized signal tho which is what SONAR played for "Input Echo" and what it records.

You should not be using MME mode, use ASIO drivers or you'll get nowhere with Sonar or any DAW.  The windows mixer should not even be involved when using a audio interface.
PS you might want to start a new thread in the X1 forum as it  the correct way to post questions...they call it hijacking a thread.

Cakewalk tech support said to use MME and I'd already followed the advice here: http://www.cakewalk.com/Support/hwsetup.aspx?dm=alesis&man=Alesis 

Tech support also said IO2 ASIO drivers are not "true ASIO", just shims around the MME driver.

Wrt to hijacking, I picked this thread because it seemed to be about exactly my problem and some forums like you to show you've read past postings first and discourage starting unnecessary new threads.  I don't care, I can do either.  I think of hijacking more as drifting off topic on a thread.

Tonight I ordered a Tascam.  Maybe it will work better.  I flailed trying to get Alesis to run reliably without dropouts so who knows, I've probably ended up with some obscure non-default setting.  Worked fine with the Cubase demo that came with the IO2. 

Computer-based recording is awesome when it works but my old Fostex 8 track had certain good points.

ChewingAluminumFoil

I'm using the IO|2 in MME driver mode as recommended by Cakewalk.

MME is only recommended as a last resort or an easy option.  Don't take this "recommendation" as being a positive endorsement.

Going back to ASIO driver mode got rid of the high pitched sound and seemed to take the Win7 record level control out of the picture.  But the drop outs are back bigtime.  TASCAM on the way.  Sheesh.

I'm not against hi jacking, it's just a lot of idiots will think it's a new thread and answer the OP instead of you, just sayin'

I think then your problem is the old " there are no proper ASIO drivers for this interface" which then you are doing the best thing and ditching it for something else. Good luck, it should work.

Is there a way to adjust the level of the input signal, you only get a three-color LED peck.

infoleather


Is there a way to adjust the level of the input signal, you only get a three-color LED peck.

That's not near enough info.
First of all like has been said in this thread already the meters in Cake' are way more detailed and show true record level. You're presumably talking about rough level indicators on some pre or interface?