Thanks PMM and sorry for my late reply.
To be honest I was worried about my asylum case still pending.
1- Do you think Canada Immagration can let my wife sponsor me for PR with my "pending refugee status" here in the US? I heard that they will only consider my wife's sponsorship only If i withdraw my asylum application before she submits the application for sponsorship.
2- By withdrawing my asylum application will I immediately become illegal. I have a working permit, will US Immigration immediately cancel all my "working priviledges"?
3- I was illegally arrested and detained twice in my country but there is no official record. Evidence is easily falsified and/or destroyed because my home country is poor and not computerized. I did mention those two arrests in my asylum application though. Canada Immigration requires background checks from both home country and here in the US. I am pretty sure the one from my home country will show no criminal record.
Will this be an issue for my sponsorship in Canada?

I desperately need advice. I am confused and don't know what to do.
1. Yes, what you heard is correct. You will need to withdraw your asylum application before your wife can submit the application for sponsorship.
2. I assume you have an EAD card. I suggest that you renew your EAD card first so that it would be valid for a year, and then withdraw your asylum application.
This way, you can continue working using your EAD card.
3. If there is no record of your arrests in your home country and you are sure about it, then you don't have to report it.
However, I think it is the best policy to be honest and write a letter explaining to Canadian immigration your illegal arrest and the history behind it.
Also make sure to tell them that you did not commit any crimes. This way, if they find out about those arrests in the future, you told them about the arrests already
and you will not get in trouble since you are honest.