thanks a lot for the suggestions – you are really helpful. Anyway, I *think* I have sorted out this thing. I have downloaded a latency checker from http://www.thesycon.de/deu/latency_check.shtml and I have loaded 4 VSTs in Cubase and 9 FX along with pre-recorded audio. So I had a two bar loop in Cubase and while this was playing I was looking at the latency checker which showed normal activity followed by significant red spikes. The latency checker suggested that I started uninstalling problematic drivers from the Device Manager so I literally left my laptop naked and still had the same problems. I was about to give up when I had the idea of disabling the AERO environment from Vista and it worked!! I only had 1 red spike in the VST performance which was also recorded in the latency checker.
Exact same things with the RME Fireface 800 driver – it just doesn't like the AERO. So, I was wondering if the guys at Eventide who wrote the drivers, checked their performance with AERO enabled? It makes a very significant difference. I searched a little deeper (I am a computer programmer) and I have found that Vista allocates a very small Process ID (PID) to some drivers, for the RME drivers the Process ID was 2 (let me just say that a PID of 4 means that the driver is actually IDLE!!!!!) so it takes a little time to wake up the driver, give it a higher PID (a lot of times it gives the value of 15) which… surprise surprise… coincided with AERO (so that could be a potential conflict) and then returns the PID.
Like I said, I left Cubase playing for more than 1 hour with the VST performance at 35%-40% and I had only one red spike. Also I had to change the Routing from Analog A-B to Firewire A-B (silly me… that was the reason I couldn't get any audio in the first place). My bad, but I had 6000 things in mind and I forgot the most basic…
So, I will test this setup some more and report back… Nick, I have to thank you for your help again. You guys rock!