Hi,
You have the track highlighted in RB--it's glowing amber. Now, go to the top left area of the tracks window. Click on "Tracks", choose "Erase". You will see the unwanted track disappear. Then do as you've done before--right click on the track and choose the midi instrument you wish to create. Very quickly, you'll see the new one appear. At least, that's what I've been doing. smiles. Good luck.
Griff