Software and Hardware questions

VDJ LE is terrible! you need VDJ Pro to unlock the controllers full potential. I’m not sure if the ergo works with serato intro but it definitely doesn’t work with itch, and if you want to scratch you can bet it won’t be possible in traktor

in regard to your sound issues it is delayed because the computer has to process and buffer the line in before playing it through the speakers after vdj has played it.

if you upgrade or activate the trial you can use the onboard computer soundcard for the main output. You can also download extra effects to use during the trial from the vdj forum.

The last option aside from getting new speakers is to get an adapter that will connect dual male rca’s to stereo female headphone jack then plug your speakers directly into the ergo, but be careful as they won’t last long as dj monitors in most cases.

First of all: Get decent monitor speakers. How you do it atm you will never be satisfied.
Here are some recommendations:
Cheap: M-Audio AV 40s
A little more expensive but “real” monitors: KRK Rockit 5

Now for the software:
If you want ease of use and not to spend a lot of money: Use Serato DJ Intro. It works good with the Ergo, however not all lights work. The integration is however very good and the jog wheels are as tight as the Ergo’s jogs can be. So you might even be able to get off a scratch.
If you want tweakability all the LEDs working and a full blown software you will have to upgrade to VDJ Pro which is a hefty price. However you get free updates for live, so in the long run it may pay off, especially since we have great hopes for version 8 that is around the corner. Plus you can use the Ergos extra button to mix video! It is the only software that can do that.
Traktor is quite a lot cheaper (I guess 80 Euros) and has all the features (except video mixing), however it won’t integrate as tightly with your controllers jog wheels and special featues. As synthetic said: Scratching is prolly out of the question and for the Ergo Traktor is the software I would least recommend.

If you are just starting out you prolly will be fine with DJ Intro at first and may use that for a few months before you make a final decision.

you could always get an adapter (if needed) to hook the ergo directly to your computer speakers you have now and bypass the computer sound card completely.

I see this was already suggested by synthetic after i posted so I will just +1 on his suggestion!!