I didn't think I got Studio Instruments with the new cwbl, but I was looking at my downloads and saw it there. I installed it and sure enough I do have it. but I have no idea how to use it. Don't see it under synths. How do I assign a new midi track to it?

They should appear under the VST2 Synth insert as "SI-[whatever]" If they don't, try a quick rescan of plugins.

I'm having the same problem.  I know I installed it, and mines not showing up either.  Not even after rescanning the plugins.  That being said, I'm still fairly new to Sonar/CWBL so it's possible I'm not looking in the right place.  I don't see anything as to where to even find the VST Synth insert.  
 

I now have the "synth" up and running, and can play it with its built-in keyboard, but still can't figure out how to play it with my midi keyboard, or assign tracks to it, etc. I copied a violin line to the audio track it's "on," but it doesn't play.
 
The way I got it thus far was I inserted an audio track, and in the FX bin I was able to locate it.
 
I also had to add it to my scan paths and rescan my plugins.

While Cakewalk still supports adding synth in audio FX bins that has not been the recommended process for years. Synths should be added to a project either with the add track button, one of the insert synth menu options or drag and drop from the browser into a blank area in the track view.
 
A synth needs at least one audio and one MIDI track or an instrument track.

 I copied a violin line to the audio track it's "on," but it doesn't play.
 

Because MIDI is not audio. So you need to put MIDI Data onto a MIDI track and audio onto an audio track. MIDI for the instrument track as well.
 
 

scook
While Cakewalk still supports adding synth in audio FX bins that has not been the recommended process for years. Synths should be added to a project either with the add track button, one of the insert synth menu options or drag and drop from the browser into a blank area in the track view.
 
A synth needs at least one audio and one MIDI track or an instrument track.

Perhaps a function of my using 8.5 as my latest version until now. I'll do some experimenting.

I made a tutorial on using VST and setting things up, lots of screenshots, might help you sort out how things work. 
http://www.cactusmusic.ca/Sonarmidi.htm
 

I know how to set up VSTs, I happily use Aria, Play and several others. My problem is that I don't find Studio Inst. under synths, so I can't insert it as a synth (which I would think it is). Instead, I find it under audio fx, which is why I insert it into the fx bin of an audio track. I see no other way to get it up and running. But since I don't normally set up VSTs this way, I have no idea what to do next, or if it is even possible. Perhaps it is meant just to be played live and recorded?

Well that is why you should possibly take advantage of the FREE version of Cakewalk now being offered. 
For sure you won't have that issue. Using old software that is no longer supported means your on your own to sort these things out. What is your reason for using 8.5? 
There is no way a Instrument VST will show as an Audio effect as far as I understand.