Also this is in preparation for when Cubase will not longer accept VST2. Currently by plugin ID if both are found only the VST3 will show up.
Removing the VST3 so the VST2 shows up is just kicking the can down the road. Sure it works but at some point, maybe next year, it will not.
Just something worth noting, the system VST3 selection and hiding VST2 has some logic behind it.
Let’s not forget the root cause of the OP’s problem:
So the faulty Kontakt instrument needs to be fixed.
Personally I’d be happy if VST2 disappeared from Cubase with the next version. If I want to stay in the past, I can run still Cubase 11 or 12. I even have C8.5 (32-bit), SX3 and … wait for it … Cubasis VST5, from the Pinnacle era! These are all on the same Windows 10 machine.
So I have to say: it’s time to move on; there are other duduks out there* if Ventus Winds don’t want to fix the problem.
(not a sentence I ever envisaged hearing myself say!)
Just ran into a similar issue with a different library, where the VST3 version breaks the scripting. The developer intends to review the script, but doesn’t have a timeline.
As a work around, it turns out that Blue Cat Audio’s PatchWork can host the VST version of Kontakt inside the same Cubase project as Kontakt VST3 directly.