Mac, Mac, Mac,
What can I say? You are an absolute genius!!! Thank you sir.
Last night my brain was fried after 2 weeks of struggling with these issues. So decided that I would take a break from it and sank a couple of Gibson's instead.
This morning...I simply followed the instructions in your last post and it all works. Whoo Hoo.

Summary of my findings are:

1. Set the Volume boost (in Midi Options menu) to about 25 only if reqd. If higher, the sounds start getting distorted and very tinny. So now the Volume issue is resolved.
2. Using the connections you detailed, I can use the FP 7 speakers or Studio monitors or both (my choice) by turning the FP7 speaker switch on its rear panel to OFF. If by chance there is no sound, also check the LOCAL OFF/ON status on the FP7.
3. Thought should be applied to the instruments you want in the Thru and Melody channels. i.e. The FP7 instrument being sounded is on the Thru Channel. So if simply "playing along" with BB backing, Set the Thru instrument to what you want to hear. If you are "recording" with BB backing, check what instrument you want recorded on the Melody channel because that is what will be recorded by BB, while the instrument on the Thru channel is what you will hear through the monitors.
4. I now have solutions for either using MME OR ASIO4all, although as you say why muck around with ASIO when MME now works superbly.
5. There is NO latency to my ears!!

Now, to one underlying burning question which I know you can answer to close this thread....
The USE DXI button is UNCHECKED.
The tracks consist of 1)RTs, 2)MIDI tracks and 3)the FP7 on the Thru track. What is producing the sounds for each of them?

Cheers
Chris
p.s. I can now get back to playing the sax and pursuing the mysteries of EQ and Compression:)
p.p.s. After you answer the question, I will request a Mod to move this to Tips/Tricks as well as consider it for the FAQ.

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Windows 8, 64 bit, 8 gb ram, 2012.5
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Roland FP7, M Audio Fast Track, Audacity, Selmer Ref 54, Shure SM58.