Just wondering if Sacred Valley is worth seeing. Also if it is possible to do a half-day tour.

We loved the Sacred Valley - especially the ruins at Pisac and Ollantaytambo.

Will you be staying in Cusco? Half-day tour from there? Are you going to MP?

The ruins and the market of pisac are an absolute must - an easy day trip from Cusco.

And no, Pisac is not a realistic 1/2 day tour from Cusco. As I recall it's a 30-45 min drive from Cusco. The market is huge and could take up 2 hours easily, and the ruins, located above the village, are a bit spread out and require hiking.

Yes we are going to Machu Picchu. We're not much of a hiker and the market is not a priority for us either. Is it possible to enjoy this area without much hiking involved. We just want to enjoy the sacred valley area. Our other alternative is to do a balloon ride or do white water rafting in the valley. What are your thoughts.

I'm not aware of balloon options in the sacred valley, but rafting trips of various durations and difficulties can easily be arraged in Cusco.
As for your desire to avoid hiking - if you're seeing Machu Pichu,or Sacsayhuaman, or venturing in Cusco's San Bals - you're hiking. These areas are all like San Francisco, accept with stone instead of asphalt.