@chuckebaby - I re-personalized and re-scanned with same results. I have a NVIDIA GeForce 9500 GT, and according to Windows, the driver software is up to date and I am up to date with Windows 10 updates. 
 
@gustabo - I did the reset and re-scan with the same results.
 
@kitekrazy1 - All three instances of Kontakt 5 behave the same.
 
I just loaded a project that had two instances of Kontakt 5 loaded and it PLAYED just fine. When I opened the Kontakt UI and interacted with it, it hung again.
 
One other bit that may be important - after the 2016.08 update, I occasionally get a window at the bottom of the screen where running programs show up that says "HUDNow", but this seems to be happening when loading projects. I haven't been able to determine yet if there is a pattern to when this occurs.

Kontakt 5 is up to date?
 
Just F.Y.I
I have Windows Updates disabled and haven't done an update other than the first day I installed the OS,
2 or more years ago, and Kontakt 5 runs perfectly on the most recent version of splat.

When istalling splat 2 days ago it updated 2 things but other than that
I don't do Windows updates and have never had a problem because of it.
That partition is music only and never anything else unless it's music software related.

@Steve_Karl - sorry, in the first post I mentioned that Kontakt 5 is up to date according to the Native Instruments Service Center - 5.5.2.880. I am also on the most recent version of SONAR Platinum, too - 2016.08.

nVidia...not the first time that name has popped up. First, don't trust Windows to know what's the right driver. Always get graphics drivers from the manufacturer's site. I had a big problem with a Radeon card and had the "latest update." But I didn't. When I got it from the site, all was well. Also, try rolling back your graphics driver to a previous version.

@Anderton - I updated to the most recent version according to the nVidia site. No change.
I updated to 2016.08 Update 1 and no change.
Sigh. Any other thoughts?

Have you tried Kontakt in any other host applications? VSTHost from here http://www.hermannseib.com/english/vsthost.htm is pretty lightweight.

Does the standalone version of Kontakt 5 work properly?

@adrian.crossan - Wow... I wish that I had tried that earlier! It fails the same way in Reaper 5.23/x64, too. 
@shawker - It seems to work fine in standalone. No hangs and with multiple libraries tested. That implies it could be something related to being hosted.
Oh, and in case I forget: THANK YOU ALL! I really appreciate your help! 

I just tried doing an Windows Defender exclusion of all the sample directories and VST directories and it didn't make any difference for the hang...

Okay - if it's possible that it's graphics card related, can anyone propose a decent graphics card that I might try to see if it's that?