The main difference between the 2 is in how you use it. Though you can drink powdered milk, it is most usable in cooking and baking. Instant milk is great for cooking but is the one that you'd want for drinking. It has a finer, more dissolvable consistency and DOES NOT have a smell to it. Powdered milk does have a smell to it, is thicker and requires hot water and vigorous shaking to reconstitute for drinking.
I have a great recipe for Crescent Rolls you can make using your instant milk. I love this recipe. The rolls are super soft and semi dense inside and have a light crispiness on the outside.
It's from Make a Mix Cookery by Eliason, Harward, Westover.
This makes a bulk recipe for the base of a crescent roll. So keep that in mind. Make the lot and store it in zip locks for any time you want to make rolls. Use within 6-8 months. Makes about 22 cups of hot roll mix.
5 lbs all-purpose flour
1 1/4 cups sugar
4 tsp salt
1 cup instant nonfat dry milk
To make the roll
1 Tb. active dry yeast
1 1/2 cups lukewarm water
2 eggs, beaten
1/2 cup veg oil or melted margarine
5-6 cup CRESCENT ROLL MIX, above
2 Tb. butter or margarine, softened
In a large bowl, dissolve yeast in lukewarm water. Blend in eggs and oil or margarine. Add 5 cups roll mix. Blend well. Add more mix to make soft, but not too sticky. Knead about 5 minutes until dough is smooth. Lightly butter bowl. Put dough in bowl and turn to butter top. Cover dough with a damp towel and let rise in a warm place until doubled in bulk, about 1 hour. Generously grease baking sheets. Punch down dough. Divide in half. Let stand 10 minutes. On a lightly floured surface, roll out each half to a 12- inch circle. Brush each circle with 1 tb soft butter or margarine. Cut each circle into 16 pie-shaped wedges. Roll up each wedge from the wide end. Place point-side down in a crescent shape on prepared baking sheets. Cover and let rise again until doubled in bulk, about 45 to 6- minutes. Preheat over to 400 F. BAke 15-20 minutes, until golden brown. Makes about 32 rolls.