Multi track software doesn't have a latency between the recorded track and tracks already recorded! Crap, if that was the problem, they could NEVER sell any of this stuff!!!
Cables hooked up properly? That is rich!!!
Monitor via the hardware. 0 latency. My soundcard has software options to route the input of the soundcard to the output directly. It is the "monitor" selection. Only problem here is that the volume is what it is at the input, and trying to "mix" the input volume with the output volume COULD adversely effect what is being recorded (in the case that the input volume is too loud, I wouldn't want to lower it if the level is good for recording right? Of course not...)
There are many ways you can use even a 1202 well in the tracking stage. I have one right now, and I do plenty of overdub recording to Sonar, and I haven't even went in and change ANY settings to improve performance or latency. You could:
Send to the soundcard via the Insert jack for one of the mic pre channels. In this case, you would adjust the volume of the soundcards output, which would be hooked up to one of the stereo channels up or down to "mix" it with the vocal channel.
Use an Aux send off of the vocal channel and the stereo channel (the soundcard output is hooked up to this) as a way of feeding an headphone amp.
Either way, you are monitoring from the console, NOT after the software, which WILL have a certain amount of latency (and even a 10ms delay CAN be annoying....the blend of the singers headtones and the voice they are hearing from the software would cause a nice little phase shift, which could cause the singer to adjust the timbre based on what they are hearing....)
Anyway, it is simple. Just monitor via hardware and be done with it.
Eddie