Silly question here:
Plugin effects and VST instruments both have .dll file formats, and they sometimes reside in the same folders; so how does Nuendo decide which ones will appear as Insert effects and which ones will appear on the VSTi list?
When Cubase/Nuendo starts up it questions all the .dlls - they reply by saying what they are (effect or instrument). Both effects and instruments are ‘VST’ format .dlls .