Automate VST effect ON/OFF?

At least, this was the situation some years ago. I don't think it has changed:
On/off automatibility is VST dependent. AFAIK most VSTs don't support it. I don't know why.
The workaround is automating the actual VST settings between neutral/desired settings or using a send and automating that.
 

You could also, put the effect on a send and automate the send.

You could also duplicate the track.  Insert the VST on one, and then delete the unwanted sections of both tracks.

You can do this with some of the FX.... I recall playing around with automating the FX..... it involves using an envelope to control the on/off and doing it with midi. I had to set up a midi track, insert an envelope and link it to the FX in the audio track.  Seemed like a lot of work to turn something on and off.
 
The easier way is to simply clone the track.... place the FX in it at the level you want, and use volume envelopes to switch between the 2 tracks. Zoom in to set the envelope on in one track and off in the other at the same exact time.  If the track is... for example a guitar or a vocal, it's really easy to get those edit points spot on.  Make the envelopes switch in the pause between the phrases.
 
I find this method to be so much easier and quicker to implement than the time it takes to set up the midi control envelope and link it properly to the FX in question.

Do as Scook said. far less 'hoops' than dealing with envelopes or separate tracks.

You could try putting the effect in an FX Chain and automating its on/off button. However the last time I tried this in the ProChannel I found that the automation would only be read if the ProChannel in question was open in the console. When I reported the bug on the forum someone from Cake said that there was no plans to fix it because doing so would break a whole bunch of other stuff. Definitely an area of Sonar which needs some love....

The way I always do it....I slide the effect output to off with automation turned on. For example, say I'm using like a Sonitus delay and want my vocals to have delay in certain spots.
 
I turn on automation, select the level I want the delay to be at, press play and then just turn the effect output slider to 0 in the passage where I don't want delay.
 
Then while still playing back, hit "undo" to bring it back to my delay level I want, then hit undo and it will go back to 0. Press stop and my automation is complete. If there is something I need to fix, I go back and adjust the nodes accordingly. Sometimes I rehearse my "undo" procedure to get it down tight. Other times I nail it on the first try. It's not the ideal way to do things, but it works perfectly for me. :)
 
-Danny