Is it possible to cast shadows and catch shadows with power sphere. It works if I make it a 3d layer but not sure if Im supposed to as after effects says camera and lights are for 2D layers.
You can't use that to cast shadows ON another 3D plugin (you should forget about that) but to cast it from any 3D plugin to AE's 3D layers (in both Classic or RayTraced modes).
It depends what you want to do: if you make the Power Sphere layer 3D, then the sphere won't be rendered as expected depending on how you look at it.
For example here, you can see that by making the layer 3D the "sphere" isn't really a sphere anymore ...
... because 3D plugins work this way: you need to have them on a 2D layer for the image they render to be correct. And because the camera and the light need to see different the sphere from two different angles, this is what Elementary sets up:
In the case of a sphere you could fake the shadow by using a 3D circle to cast the shadow and use expressions to place it properly, but then what if you want to use parameters of the sphere like the unfolding etc ... it's easier to let Elementary set up a shadow caster for the light since Elementary has linkage features and will cascade any change you make into the shadow or reflection compositions.