"However, I also installed Kontakt 7 which is 884 MB of space so it should have some instruments in there too? Or am I not understanding how anything works?"
Probably best to start by telling us what you have purchased (or registered) in your official Native Instruments account? Was it Komplete Start? or some other package?
I am guessing you are installing the "player" version of Kontakt (and Reaktor). That you can see Etheral Earth is a good sign - but Kontakt Player (and Kontakt Full for that matter) do not normally ship with a pile of instruments.
You must buy them and install and Kontakt will pick them up and make them available.
But really - need to understand exactly what you bought/registered with NI (or didn't buy) as Komplete Start is free.
VP
I think this "Kontakt 7 bundle" is simply Kontakt 7 + The Factory Libary.
And yes - the "Kontakt 2 Library" will give you a nice selection of basic instruments and must be installed along with Kontakt.