I see now this is not really a bug. I'm just not using track folders properly. In order to have a the tracks be put into a folder there needs to be a new track inserted above the Kontakt main track, like so: Now, when you toggle the Folder Track to hide the individual "child" tracks the sound does not mute. If anyone reads this who is as inexperienced as me, note that when you create a folder like this the folder acts as a sub-mix bus for the tracks in the folder. The output from all the child tracks is received by the Folder Track, and even though you see the tiny word "Master" still lit next to the I/O button at each track the output of the individual tracks directly to the Master is automatically disabled once you've created a Folder Track. The Folder Track is sent to the Master. You can read more about this on pgs. 88 - 90 in the REAPER User Guide. "Anything that you do to the folder will be done to the entire submix. For example, if you adjust the volume up or down, the volume of the submix will be adjusted up or down. If you add an effect such as a compressor to the folder then that effect will be applied to the submix."