You say you want a midi channel to increase in volume?
I take it this is for an external midi device (as you say you couldnt get VST instruments working). It sounds like your external midi device is not set up to receive midi volume.
If this is a really old device it may not be able to do midi volume at all, but otherwise you need to enable it on your external device in the settings somewhere.
It's the same with velocity. If the sound is not set up to use velocity then the volume wont change, no matter what velocity settings you have in Cubase.