I found this thread while solving the same issue and wanted to add a further notice that should also solve Dlk’s problem.
I found that, while trying to setup it, I had set up the “Quick VST control” setting. So, in order to have all controls in place and only active for VSTs:
- plug NanoKontrol2 USB while holding buttons “cycle” and “set”
- open Cubase
- go to “Devices → Device Setup”
- find “VST Quick controls” and “Track Quick controls” and set their MIDI Inputs and Outputs to “Not Connected”.
This should leave all knobs and faders free to use with VSTs. I imagine that, while mixing, the Quick Controls may be enabled again just for that time.