Just to be clear you can still record and utilize your external instrument within cubase essential without needing to set it up as an “external Instrument”
You will just need to manage the external synth manually.
Couple questions for you
are you using the usb connection for your midi i/o or are you hooked up to a midi interface and using ports to route the midi via the midi connections to and from the synth?
how do you have the audio I/O routed to cubase or your audio interface and what are you using for routing audio in and out of cubase?
what computer are you using ?
FWIW if you put your system specs in your signature it helps ( lots of users don’t but you can avoid lots of typing and delays in getting help from other users if you list it in your profile)