[Led]

Why is contact on the insert in the aux track? Try just creating just an instrument track with Kontakt on it's insert, and record your midi on that instrument track, see if it works.
Also, you aren't supposed to be able to record midi on to an audio track, if I understood what you said correctly..you record it on the instrument track or create a midi track and set it to feed Kontakt on the instrument track.
If what you are trying to do is record midi playing kontakt then record that as audio, the simpler way is to record on the instrument track, then create an audio track underneath it, and drag and drop the midi clips on to the audio track and it will be converted to audio clips. Unless LE doesn't do this, but I don't know if it does or not.

I think the problem is that you have Kontakt on the insert of the aux track, it should only be on the instrument track.