you need to check 'reroute all midi to default DXi synth' for it to work. DXi and VSTi are treated as the same thing here. If this in not enabled you will hear nothing from the VSTi via MIDI input.
Make sure thru is enabled foe MIDI also.

MME will likely be 'slow'to respond, known as latency.
Maybe ASIO4All or updating ASIO drivers for Layla will give you a working ASIO driver so it is faster to respond.

I do not work here, but the benefits are still awesome
Make your sound your own!