mainstage2/air/m-audio fastrack usb/guitar no input

I just bought MainStage 2 and downloaded to my Macbook Air (13 in) running OSX 10.7.2. Connected my guitar via m-audio fastrack usb and selected the m-audio interface for both sound input and output in system prefs. In mainstage I also made sure to select the fastrack device for input and output. Yet, when I played the guitar no input was recognized in mainstage. I could hear the raw guitar (a Taylor T5) through the earphones I had connected to the m-audio device, but nothing was making it to the computer. Same problem in garageband. I tried another guitar too, but same result. I also made sure to install the most recent m-audio fast track usb drivers.

Any ideas? I know I've gotten the fastrack to work with garageband before with no problem (on an iMac with an older OS). I'm wondering if the problem is something about the air?

Thanks for any help. I'm doing a live gig in a few weeks and hope to be able to use mainstage for it.

Bob