Not a MODX question.
I believe you need to upgrade to Cubase Pro 10 for the ARA-Support required. But you should really contact either Celemony or Steinberg (not really a MODX question). Let us know when you find out.

Thanks for the reply Bad Mister.

I downloaded MELODYNE ESSENTIAL demo and it seems to be working perfectly in CUBASE AI.
Will play around with ESSENTIAL for about a week to make sure it is working properly with CUBASE AI.
I contacted STIENBERG and I am waiting for a response back.
As soon as they give me the lowdown I will post back here, as this info may help others.

I think what your testing shows is that advertised modes are working fine.

Source: https://www.celemony.com/en/melodyne/editions-and-technical-matters

Plug-in operation – Run Melodyne as an AU, VST, RTAS, AAX or ARA 1/2 plug-in in compatible DAWs

... and

32-/64-bit compatibility – Run Melodyne as a native application on 32-/64-bit systems

Melodyne has several editions (small, medium, large, extra-large). All editions support the above features.

VST - check. 64bit - check. And your testing works - so it's the "right" VST version.

This page: https://www.celemony.com/en/melodyne-update?checkLang=1
... shows the VST version as VST3 - check.

Seems like there may be corner case issues if you migrate old projects or have certain settings. None of these will likely apply - but placing a link for reference:
https://www.steinberg.net/forums/viewtopic.php?t=131068