I can’t write any midi as its not getting thru to Halion Sonic. I tried using the virtual keyboard on the Halion Sonic VST but despite the blue bars registering midi on the channel and the channel set to record, no midi was recorded that way either…
Set the locators to a couple of bars and the double click on the MIDI track between the locators to create an event. Make sure the track is Monitor-enabled then double click on the event to open the Key Editor. Hit notes on the keyboard here. Get sound?
Managed to create an event, double clicked the track and got the key editor thanks. Managed to record some midi using the mouse and virtual keyboard, mute off and still the midi keyboard which is still registering activity on the transport bar is not registering with Halion Sonic. Thanks very much for the suggestions by the way, it’s really appreaciated Guitman : )
Screenshot of MIDI Port Setup in Device Setup and Project Window?
Does the MIDI track show MIDI activity, or only the transport bar?
Does HalionSonic SE show MIDI Rx activity?
I finally resolved this issue, thanks to everyone for taking the time to contribute ideas to solving it.
I followed advice and from the main screen got the drop down menu from the File tab and selected Preferences.
In there, any of the headings with the word midi, I checked or unchecked the boxes and saved them, basically changing the each setting to exactly the opposite to whatever it was already on. Once I had done this to each midi setting, I clicked the Defaults button at the bottom of the page.
After that, the midi worked fine. Exactly what part of that solution actually fixed the issue, I don’t know.
Thanks again. 
9 Years Later - still have EXACTLY the same problem. Have trashed my Preferences file - no fix. Running Cubase 10.5 Pro on Windows 7 Pro. Spent Weeks trying to fix this - and I been around since the mid 90s on Cubase