Having solved this years ago on an xp machine I anticipated having an issue again but forgot how challenging it is: Here's the pertinent data I can supply for now:

Windows 7 pro 64 bit
ASUS P8Z77-V LX Intel 7 Series Motherboard
Intel Core i7-3770K quad core
alesis multimix 8 firewire (latest drivers installed)
Asio drivers
TI 1394 host compliant firewire driver
sonar x1

I have played around with everything, buffer settings, switching 1394 drivers, wdm, asio4all and nothing has eliminated the pops and crackles. They are noticeable on playback and are reproduced each time at the same point so they are inherent in the recording process. They seem to occur at the peaks for the most part but I can't be sure of that. Have tried and removed asio4all as it made no difference. Have turned off system sounds.

I've jacked up the buffer setting in the alesis control panel (done through the Sonar audio preferences tab) to 1024 from the default 512 which worked fine on my xp machine with sonar 8.5. I have the operation mode set to Safe mode level 1 (and btw, I can find very little reference out there as to what that setting does, in case someone can explain). The sample rate in the alesis panel is 44100. I can barely detect any improvement with the higher buffer setting.

In the audio preferences, the sample rate is also 44100.  Audio driver bit appears to be somewhat grayed out bit it shows 24 and 64 bit double is unchecked. In this tab, reported latencies with these settings are:
input 23.7    1044 samples
output:  31.7   1397 samples
round trip: 55.4      2441 samples


Any help with this would be greatly appreciated. I can supply more info if needed. just let me know
Thanks

I just switch back to my Alesis Multimix 16 firewire to test, and I'm able to set the driver at 128 samples without any issue.

Setting to 128 samples resulted in ASIO reported latencies as below :
input 3.4 msec, 148 samples
output 5.4 msec, 236 samples
roundtrip 8.7 msec, 384 samples

Is your system newly setup ? Have you check it with the following ?

http://www.thesycon.de/deu/latency_check.shtml

I don'y see a sample size setting. In the alesis control panel I can set the buffer size, but only down to 240.

I'll try the latency took, not sure I'd no what to do with the findings however.

Yes the system is newly set up

Win 7 should run fine without much tuning. Look for any spike with the latency checker.

Most probable culprit :
- wireless networking, if you're using it, turn off and check with the latency checker if it's improved.

From my setup note, turning off win 7 aero seems to help. At least from the beginning, perhaps it's now solved with latest graphic drivers update, but I've never gone back to aero.

Another setting that seems to help is to turn off file indexing :

Start - computer, select C drive, right click - properties.
At the general tab, there is an option at the bottom "Allow files on this drive to ... indexed...". <- turn it off.

Btw, I'm running my Alesis ASIO driver at normal operation mode (not safe level).

The ASUS P8Z77-V LX Intel 7 Series Motherboard doesn't have a built-in TI firewire port right ?

Thanks for sticking with it. 
Right, I have Belkin firewire card that has a TI chip.
 I've used it before in my XP box. May be the culprit but I actually didn't try Normal Mode. The only thing I didn't so I'll do that in a bit.  No wireless card here. It's a Box.  I'llt ry the indexing but have my doubts about that one

Sorry to report that there are no spikes with latency checker. Used while doing a test recording. Still pops and clicks on playback. Asio/alesiss panel now set on Normal and 512 Buffer size

Also,if it helps,  the pops and clicks seem to occur when the recorded wave is near peaks. Yet, the meter indicated that the recording level wasn't even reaching red at all and the peak levels do not appear to benear  maxed out at all.

In Win 7, have you tried setting the firewire controller drivers to 'Legacy' for your Belkin card?  Some firewire audio interfaces prefer legacy mode for reasons I'm yet to understand.

Solved

Although I heard pops and clicks similar to latency and buffer issues that I had in the past, I noticed that these were coming mostly near the peaks of the waves. But as I mentioned, while recording, nothing was even close to coming into the red of the meters.  However, I happened to look at the alesis and noticed my Main Mix Output was set really low. When I re-adjusted this and then compensated with the individual input levels and guitar volumes the problem went away. I don't really understand why it was apparently clipping if the record meters were not in the red and the wave did not look all that large but that's what it was. If someone can explain it, I'd appreciate it.