I’m not sure what you’re doing wrong. You can definately move whole folders and individual outputs. I do it all the time. Just checked (make sure I’m not losing my mind!) and it worked fine. Moved in the project and the mixer.
Perhaps ther is a preference selection for the mixer order to follow the project . . .?
I can create, say, 4 x 8 out instances of Kontakt. Then move any instance of Kontakt to any position (the whole folder). Or if you want to get crazy you can tacke individual outputs and place them anywhere outside of the folder - with your audio tracks . . . next to a MIDI track . . . whatever. And the mixer follows.
Cubase 7.03.
I’m using Rack Kontakt instances also. Very rarely use Instrument Tracks.
Are you grabbing the Kontakt folders on the name (of course, silly, I know)?
Hugh