Audacity doesn't do continuous software monitoring, it will only do software monitoring while recording (by selecting "software playthrough" in the Preferences menu, it's not the best option though). It appears that Traction does do continuous monitoring. So you have two options: enable hardware monitoring through your soundcard and disable software monitoring in Traction, or set up two different profiles in M-Audio's software to quickly enable hardware monitoring when you use Audacity and turn it off when you use Traction.
Right now though, you don't have hardware monitoring set up correctly. This is something you'll have to change using M-Audio's software. I'm not at my home computer (that has an M-Audio card in it), so I can't tell you exactly how to do it. But I know the tab you need is the first one that comes up (it shows sliders for each input and output, in addition to the main output slider). You'll need to turn up the volume on the inputs that you're using. On the second tab, you need to change the source of your main output channels to Monitor (instead of Channels 1+2, or similar).
You can use M-Audio's software to set up profiles to quickly switch between. Either that or you can turn off software monitoring in Traction. You don't want both software and hardware monitoring going at the same time, you'll get a distracting echo.
There's no way to set Audacity up to add reverb to the monitor signal, Audacity doesn't do realtime effects. Hopefully it will someday.