Its not a bug. I've been using that for years and it works perfectly. You are doing something wrong, but I can't tell what because you are not explaining it very clearly. What is the default instrument tree? What is the name dialog box? I am not familiar with these terms as applied to Sonar.
If you have the Instrument Definition set up properly, then in the MIDI track make sure you have the MIDI output port that is connected to that instrument selected.
Then select a channel. The channel should list the instrument. For example, if channel 5 is assigned to the N364, then when you're selecting channel 5 it should show as 5: N364
Next select a bank. The pulldown should show all of the banks defined in the INS file. With Korg its usually a lot of banks Select one, say PgmU (or whatever they are called on the N364).
Now select a patch, the pulldown should show the patches that are in that bank
Keep in mind that when you're defining the instruments, you have to define all 16 MIDI channels for each MIDI interface.
Let take it a step at a time.
I have a MIDI interface with 3 ports so I have then setup like this:
Port 1: All 16 channels assigned to General MIDI
Port 2: Channel 5 assigned to Vocalist Workstation, Channel 16 assigned to Virtualizer Pro (Fx box)
Port 3: All 16 channels assigned to Korg N1R.