Here is a link to a post I made some time ago, but it all still applies, that attempts to detail setting up and using multiple loaded instruments in a single instance of Kontakt, and getting the accompanying audio and midi track routing assignments correctly made.
 
http://forum.cakewalk.com/FindPost/3030484
 
I do what is covered in the above link LITERALLY every single day, and it works flawlessly for me.
 
One thing I would add is that if you set up a bunch of Kontakt instances, for perhaps an Orchestral Track Template, I would suggest you consider loading similar instruments into each instance of Kontakt, so that muting and unmuting occurs on groups of similar instruments.  So, maybe one instance of Kontakt would have 4-6 violin instruments loaded, or 4-6 brass instruments, etc......
 
Take a look at the above link, and please post back with any additional questions about what I tried to explain in it, and I will try to clarify better for you.
 
Bob Bone