When using my nanoKEY to overdub, I can only hear the original track playing in the external headphones and not the new keyboard overdub. Under Transport / Overdub (on), there is another selection called Software Playthrough (off). I sometimes have turned this ON for overdubs, however it causes an bizarre unwanted effect. With the Transport / Overdub (on) the keyboard overdub comes through the laptop speakers which are really crappy. Are there some settings that I am missing? I’d like to hear the keyboard overdub in my headphones along with the track I am overdubbing. Thanks! 
OK. Step one, the nanoKEY is not a musical keyboard. It’s a MIDI controller and it’s really playing the MIDI interpreter inside the computer. That’s where the music is coming from – that’s the musical instrument, not the keys you’re pressing
And it’s at that exact point where it gets magic. Typically, with a microphone or “real” musical keyboard you can’t overdub by plugging your headphones into the computer. You can always hear the old tracks just fine, but you will never be able to hear the live performance without echo and delays – machine latency.
That’s why when we wrote the overdubbing tutorial, we posted three different special hardware devices which will let you listen to everything all the time. Theatrically correct overdubbing. Without the devices, you will always have some musical piece missing.
Now about you. Since the actual music is coming from a chip set on the sound card, theory has it that there should be no delay – the music doesn’t have to enter the computer, it’s already there. But I didn’t test that and I have no idea how I would check it. It obviously doesn’t work or you wouldn’t be posting.
Normal sound pathways make my head hurt and I can’t imagine the pathways you have.
So we’re going to wait for one of the Windows elves to help.
Koz
Yes, I sensed that the delay that I hear is because of machine latency and I’ve successfully worked around that by sheer force and re-positioning the lagging overdub track. And I do understand the midi concept. Even with this odd obstacle, I’ve done some nice work. Still wish I could hear the overdub in the headphones. Thanks for your
response!
A simple way around the latency/no sound in headphones is to export your track that you want to overdub as an mp3. Set up Audacity to simply record a single stereo track of keyboard or voice while listening to the mp3 on another device. Then drop that single track into your project you want to overdub and adjust the position of the waveform. It is primitive, however it works! 
There are two latencies. Recording Latency is where you have to slide your playback file around so it matches your voice when you play them both back later. That one’s a slider inside Audacity and we provide instructions how to do that.
“Tap a pencil in time to the playback drum track and them measure the difference between the two times…”
That’s one way. There are several. You’re doing that adjustment the long complicated way. There are internal tools to correct that.
I don’t think anything you did will affect the computer sending your own voice back to you in real time. That’s machine latency and that’s burned into the hardware and can’t be changed except by special, purpose-built software (ASIO).
If you don’t care that your own voice doesn’t come back to you in the mix during the performance, then none of this matters. Most performers like their voice coming back – a correct theatrical mix, some don’t.
Koz