Not sure if this will help because we are on different platforms!!!
I was having exactly the same problem and, after a little investigative work, I found out that it was because I had several active inserts in my Stereo Out bus.
By passing them didn’t work and I had to remove all my Stereo Bus inserts to get back to zero latency on both midi & audio tracks.
Maybe this is what’s happening with you because this wasn’t an issue with earlier CB programes, it started with CB 8
Direct monitoring is a function of our audio interface that Cubase just allows control of. If you’re not using an interface then you don’t have direct monitoring and if you do you might have to control it from the interface software so nothing unusual in it being greyed out.
BUT asuming your problem is with vsti playing with a midi controller it will make no difference. It only passes audio signal from mic or line inputs direct to outputs with no latency. A vsti is processed within Cubase so can’t take advantage of this.
As suggested you probably have something else adding extra latency or you may have some other problem.
A quick check is to click the constrain delay compensation button and try again…if this drops latency then you certainly have a latency inducing plug somewhere in your chain (that this button simply disables temporarily)