Don’t worry about the LM-7. It works fine for this purpose. You don’t need an ASIO driver. There could be a couple of things at play from your screenshots.
You have Cubase set up correct as far as the Device output and VST connections are concerned. The fact that Built-In Audio shows up confirms this. You may be making more problems for yourself by attempting to dig into Studio/Control Room in VST connections. For now, you don’t need it. Turn it off. Cubase should be able to send audio directly to your Built-In Audio/Internal Speakers on its own. It’s a Mac. It just works.
As No1DaBeats suggested earlier, Open up your Apple System Preference pane, choose Sound, click Output and make sure Internal Speakers are showing Built-In and the volume is UP. The fact that Built-In shows up in Cubase’s Devices menu means it is already set in Apple’s Audio MIDI Setup app. You can skip that.
For some reason, you have the track’s Input Transformer on (see screenshot). There could be something at work here screwing things up. Turn it off.
You are using a Drum Map on your MIDI Track. Double click on the Track to open the Drum Editor. Hover the mouse over the division between the parameters and the drum note entries and “pull the curtain” to the right to reveal all the parameters and make sure all the drum Outputs are assigned to Track (Not Connected in the contextual pull down).
You might also try using a simple Instrument Track instead of of the VST Instrument Rack/MIDI Track combo as you are doing now. Just assign the the LM-7 to it and test.
