Are you trying to run Kontakt as a standalone, or as a VST instrument?
Hit F11 in Cubase and open the VSTi listing. Select Kontakt for the first instrument slot. Drag and drop an instrument from the browser into the main instrument rack within the VSTi instance of Kontakt that pops up. For that instrument\'s MIDI channel in the rack, change \"Omni\" to \"1\".
In your Cubase project window, create a MIDI track and for MIDI output select \"Kontakt\" and MIDI channel 1.
Play MIDI through the MIDI track, and if you have your MIDI thru setting set correctly, you should be off to the races.