I have given a more detailed answer to this in the Cakewalk forum. The reasons for not using the main outs to record from are the looping problem you have already discovered: everything coming into the mixer is going out the mains, so you will record everything that you are hearing.
The Aux send volume, as mentioned above, is controlled by the "fx send" or "aux send" knob on each channel. That is why for the one you are recording, you need to raise this level and watch in your SONAR track recording meter to make sure you don't clip: this is where you control the level you are recording (the Aux send level). That is why, in the monitoring channel, you need to be sure that the Aux send level is at 0, or you will record that too.
The reason that using the Aux send will not cause the looping, is you can control for each channel in the mixer how much is being sent out the Aux Out: so you have full control over what you are recording and the level that is being sent.
Proper gain staging is important to make sure you record the best level possible. First off, make sure the eq for the channel you are recording from is level, the aux send is off (all the way counter clockwise). Now, for the channel you are recording, lets say channel 1, set the fader to 0 (ie LEVEL at 0, not OFF), also known as "unity": this should be in the middle of the dial (not all the way counterclockwise). Then, raise the GAIN pot, or it might be labelled TRIM, while you are playing what you intend to record. Each channel should have a light associated with it that will go red if you are clipping, if this happens, turn it down until you DO NOT CLIP AT ALL. Once you have done this, the channel is "gain staged", if you adjust the EQ on the channel, you will have to re-gainstage it, as you have affected the levels of different bands in the EQ.
Now that it is gain staged, you can set the record level for SONAR. Now I am talking about your track view in sonar: Arm a track for recording, and right click in the record meter for that track: set the meter for 24 or 12 dB to increase your resolution: I use 24 usually. Now, as you play, raise the AUx send level of channel one on the ALTO mixer until you see it appearing on the record meter of the track you are recording in sonar. Keep raising it as high as it will go without any clipping (going into the red is fine, but you don't want the red light at the far right of the record meter to light up: if it does you have clipped).
Now you have the best signal level you can get for recording in SONAR.
Now, the outs from the 2496 card, lets say they go into Channel 5/6 or some other stereo input channel. Set the fader (LEVEL) to unity, and keep the Trim pot and Aux send off (all the way counterclockwise). What you will hear in your monitoring is the input from Channel 1 coming direct through the board (ie not through all the SONAR effects or whatever else you have inserted into the FX slot of the sonar track) and the already recorded stuff in SONAR in channel 5/6. If the blend of these levels is not right, adjust using the channel 5/6 fader, not the channel 1 fader (this would affect the signal level you are recording, unless the Aux send on that board is "pre-fader", mine is "post fader" so it is sensitive to changes in the fader level).
IF the overall signal level is too high in your headphones, adjust using the headphone volume control, not the main faders.
Downside is you are recording in MONO not stereo, but the only way around that is to have (like I said in the Cakewalk forum) is to have either a mixer with two or more aux sends, or two mixers, one for recording from and inputting to the card, and one for monitoring.
