Is this "BIAB sound" heard BEFORE you hit play (or record)? If it is:

Try hitting play let song start then see if you don’t hear selected Pianoteq or Garritan VSTi sound. If you truly have settings as Solidrock has shown then before play/record starts MIDI data coming in will be routed to the (as shown) to the "Microsoft GS wavetable Synth."

But once play is started data goes to the VSTi or DXi you have selected for either: channel 5 in the "Default Synth" VST Plugins pull down or the "Thru" part in same VST Plugins pull down
By the way - no need to force channel to 5 anywhere. It is defaulted in BIAB and it is the default channel set in the "Thru" part of the "VST Plugins" pull down.

If that is not what's going on and you have everything set as solidrock has shown, with your keyboard controller shown and selected in the "MIDI Input Driver" then I'm scratching my head right now also.

Solidrock has a solution - but I would shoot for using something simpler like LoopBe1 or 30 or MIDIYoke AND just route you keyboard directly to the VSTi you want using a one of these internal "software MIDI routing cable" programs and play along with BIAB.

good luck
Larry

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