Yup - the Midi Output Channel setting lives just underneath the FX bin on every midi track.
1. Make sure your midi track Output is set to go to the desired Kontakt instance.
2. Make sure the corresponding audio track(s) for that midi track are set to pick up the correct audio output channels from the desired instrument from that Kontakt instance.
3. Set the midi track's Midi Output Channel to the same midi channel as the desired instrument's in the Kontakt instance.
4. That should do it.
So, as you load the Kontakt instance with multiple instruments, Kontakt will automatically increment the midi channel each loaded instrument will respond to - so that the 1st instrument will be set to receive/respond to midi channel 1, the 2nd instrument for midi channel 2, etc.... That midi channel needs to match the setting for the corresponding midi track for that instrument - which you would set in the midi track's Midi Output Channel (step 2 from above).
The other thing that I do is to get a given instance of Kontakt loaded with usually no more than 5 or 6 instruments, is to use a batch function within Kontakt to delete anything from the Output Section for that instance, and it then will add and set assignments for each loaded instrument, so that each instrument gets its own stereo output channels. I then will rename each output channel to something like Piano, Strings, Rhodes, etc....
I hope I have had enough coffee this morning to where the above makes sense. If you or anyone else needs a better explanation, please just post back to that effect, and I will take another stab at it.
Bob Bone