Liam, let me take another stab at it:
Please follow this exactly:
1. New project, normal template
2. Insert an instance of Kontakt, into the synth rack
3. Load an instrument into the multi-rack. I will call this 'Instrument A'. You will notice it has been automatically assigned to midi channel 1, if you look at the loaded instrument in the rack.
4. Load another instrument into the multi-rack. I will call this 'Instrument B'. You will notice Kontakt sets its midi channel to 2.
5. Now, IF the Output Section is not currently displayed at the bottom of the Kontakt Window, click on the button up at the top of the Kontakt window, that is called Output Section (when you hover over it). This will toggle the display of the audio output section on/off, at the bottom of the Kontakt window, below the loaded instruments.
6. Click in the output section, on the button labelled: Presets / Batch Configuration. This will open a drop-down menu - hover over Batch Functions, which will open to the side with more options, and click on "Clear output section and create one individual channel for each loaded instrument". You now have each loaded instruments routed to its own audio outputs.
7. Now, in the Track Pane, insert one or more audio tracks for each loaded instrument (mono, stereo, your choice), and also insert one midi track for each loaded instrument. Name everything accordingly.
8. For each set of audio tracks for Instrument A, set the Input on the audio track(s) to receive the audio output from the Instrument A synth.
9. For the midi track for Instrument A, set the Output to Kontakt, and in the channel strip for the midi track, set the Midi Output Channel to '1', which will match what is set in Kontakt for the midi channel for Instrument A. (the Midi Output Channel setting is just below the FX Bin on the channel strip for the midi track, and you will click on it and set it to channel 1). Leave the Input setting alone at the bottom of the midi track's channel strip. It will default to None or Omni, which is fine.
10 Set the Input on the audio track(s) for Instrument B to receive the audio outputs from the Instrument B synth.
11. For the midi track for Instrument B, set the Output also to Kontakt, and in the channel strip for the midi track, set the Midi Output Channel to '2', which will match what is set in Kontakt for Instrument B. Leave the Input at the bottom of the channel strip alone, which will default to None or Omni.
So now, with the above settings completed, you have:
Multiple instruments loaded into an instance of Kontakt
Each loaded instrument in Kontakt will have its own unique audio outputs from Kontakt
Each loaded instrument in Kontakt will also have its own midi channel that it will respond to.
Audio tracks set to receive the output from each associated loaded instrument in Kontakt.
Midi tracks set to send data to Kontakt, with each midi track set to transmit on the midi channel that matches a loaded instrument in Kontakt.
Now, click on the midi track for Instrument A. By default, Sonar will turn Input Echo On to 'On' for that track, which will highlight the button for that track. This will allow processed audio for that midi track to be heard. Because you set the midi track's Midi Output Channel to 1, which matches what is set in Kontakt for Instrument A, you should hear Instrument A audio output, since you have the audio tracks for Instrument A set to pick up the audio output from Instrument A from Kontakt.
So for it all to work you need:
Kontakt, with loaded instruments, midi channels set uniquely, and separate audio outputs for each loaded instrument.
Audio tracks for each instrument, with each set of Inputs set to receive the output from the correct loaded instrument from Kontakt.
Midi tracks for each loaded instrument, each set to Output to Kontakt, and each midi track's Midi Output Channel set to the matching midi channel as setup in the Multi-Rack, for each instrument.
When playing, click on the midi track for the instrument you wish to hear, to get Sonar to automatically turn on the Input Echo On, which is how you can hear that track.
I hope the above helps, please try the above and post back.
Bob Bone