So I convinced myself to replace 3 instances of Kontakt in a project with one multi instance containing all 3 instruments - a much more efficient use of resources. It was fairly easy to reroute the tracks in question to their respective Kontakt i/o's and all instruments are receiving MIDI and playing as expected. 
 
However, I'm now faced with the fact that these tracks are grouped because they're all associated with the same instance of Kontakt. The tracks are Keys1, Keys2 and Bass. If I solo the Bass MIDI track then not only does the Bass audio track get soloed, but also the Keys1 and Keys2 audio tracks. If I solo the Bass audio track then not only does the Bass MIDI track get soloed but also the Keys1 and Keys2 MIDI tracks as well. Therefore, treating these as separate instruments when muting and soloing is nigh on impossible. 
 
I figure this is because they are all routed to the same synth - Sonar doesn't care that they are routed to different outputs of the same synth. Is there any way of changing this behavior (or a simple workaround), or am I doomed to tear my hair out in frustration every time I use a Kontakt multi? 

Is the grouping connected to them being routed to the same instance of KONTAKT or because all the tracks are in the same folder. Can you drag the tracks out of the folder? Does that make a difference?

None of the tracks are in folders yet. They grouping is purely because they're all linked to the same synth and does not appear to be configurable. I have multiple outputs configured internally inside of Kontakt, and each instrument has its own output. These outputs are routed to their respective audio tracks in Sonar. 

To be clear: it's not that unwanted audio is muting or soloing (eg if I solo a MIDI track then it doesn't really matter that it's group-soloed other audio tracks, because their MIDI tracks aren't soloed with it), it's that it's just confusing to look at when you're doing a lot of muting and unmuting of tracks etc. You get this horrible feeling that you don't know what's going on. It's kind of messy and unnerving. 

Ah. Now I understand.

Can you not solo/mute different instruments inside Kontakt?
 
I've no idea as I've never owned a copy, just a thought, that's all.

This isn't just about Kontakt, is it? It applies to all multi-timbre synths with multiple outs like TTS-1, M1, and Sampletank. I don't think there's anything wrong with the behavior (although I didn't like it at first). How about in other daws? I must check S1.
 
HOWEVER, the real problem starts when you GROUP the solo buttons of MIDI tracks and audio tracks. Maybe you can try it, too, and you'll see that soloing tracks doesn't work properly in the PRV. I sent in a bug report and it was confirmed as a bug.

This has always been the case.  I use Kontakt multi-racks in nearly every single project since time began, (back to Kontakt 3 anyway), and it's just how it works.
 
All of the midi tracks associated with that instance of Kontakt get muted together.
 
I think it worth a feature request to Cakewalk, as I think it completely reasonable to expect only that which we click on to get muted.  Or, perhaps either a setting we can configure or perhaps a pop-up choice.
 
They have indicated a 'D' patch is coming at some point, perhaps if you get a FR put together right away they would/could get it in.
 
It would certainly help me out, as well, given the number of times a day I have this very same issue.
 
Bob Bone
 

I just checked S1, and yes, the behavior is exactly the same.

robert_e_bone
This has always been the case.  I use Kontakt multi-racks in nearly every single project since time began, (back to Kontakt 3 anyway), and it's just how it works.
 
All of the midi tracks associated with that instance of Kontakt get muted together.
 
I think it worth a feature request to Cakewalk, as I think it completely reasonable to expect only that which we click on to get muted.  Or, perhaps either a setting we can configure or perhaps a pop-up choice.
 
They have indicated a 'D' patch is coming at some point, perhaps if you get a FR put together right away they would/could get it in.
 
It would certainly help me out, as well, given the number of times a day I have this very same issue.
 
Bob Bone
 

I suspect that such a feature request would get low priority since the behavior doesn't really interfere with the intended behavior of muting and soloing in terms of what you hear - e.g. if you solo a MIDI track then it doesn't really matter that all of the audio tracks connected to that synth get soloed as well, because only that MIDI track gets soloed and hence the other audio tracks won't have anything driving them. So ultimately it's a cosmetic issue, but it still bugs me when I'm muting and soloing.