There are two versions of Kontakt. The “full” version you need to pay for and the free one, also called player. Developers pay a lot of money to Native Instruments to have their instruments appear under the Library section of Kontakt. The reason for doing this is that the instrument then is copy protected through serial numbers. Player version will only play instruments that has gone through this authorization process. To play instruments from the “file” section of Kontakt you need the full version. After 15 years with Kontakt I would say that the file section + the favorite section is a far better way of finding/loading instruments than the Library section. The library section takes up much more space and after a while it gets very crowded with instruments and a lot of scrolling is needed. So my advice is just to forget about the “need” of having instrumens appear in the Library section. You may find it “pretty” to have a small graphic indication of the instrument in the Library sectionn, but you WILL grow tired of that scrolling if Library section is filled up.
Up to Kontakt 4 there is a way of converting a file instrument to a library instrument. You need photoshop or something similar to make the wallpapeers, a small free program that creates the file needed in Kontakt, and the sample files. With that you can create any sample library to a Library Kontakt (4) instrument. Kontakt 4 will run parallell with 5 and 6. Before my Library section got crowded I turned a lot of instruments into Libraries for Kontakt and I still have access to them in Kontakt 4 even if I have upgraded to Kontakt 6. And…. the same instruments will appear under the file section of Kontakt 6.