ok cool....Stupid question, but it won't touch the VSTs that I have installed in the Steinberg folder right?
No dude, your third party plug-ins will only be removed if you remove them manually. If you perform an uninstall of SX 2, it will leave all of your Project Data in the Steinberg folder for you to sort through manually, the uninstall will only remove what it originally installed! Any Tracks, Sessions Files, Plug-ins, will remain.
I personally keep my VST-Plugins folder in C:\Program Files and then I route whichever DAW I am using to search for the plug-ins at that location. That way I don't have to worry about missing plug-ins.
And like Sleepy said, and I mentioned, just back up all of your current SX 2 Projects, and completely remove SX 2 and the Dongle.
Restart.
Perform a clean install of SX 3, and bring back in your SX 2 Projects & Data, they should work fine with SX 3! Plug-ins, again, they will not be affected, just make sure your plug-in folders are organized.
If you have to do the above, it's not a big deal! Don't be afraid of uninstalling SX 2 and it's Dongle. If it needs to be done to properly run SX 3, then it needs to be done, just protect your old projects from SX 2 and make sure your plug-ins are organized.
You do not need to re-install any plug-ins or instruments when you install a new DAW. If you have VSTi's like Hypersonic 2, or anything by Steinberg that use a Dongle, you may need to re-install those if they don't open in your new upgraded version of SX, but other than that, keep your plug-ins where they are, and if you need to move the old plug-in folder to your new SX 3 directory, do so.