Place the stainless steel pot inside the inside pot. Pour the milk and vinegar into the pot.
Lock the lid in place. Close the pressure release valve and press the "Pressure Cook" or "Manual" button until it's on "Normal" and press the "Pressure Level" button until it's on "High" (skip this if your Instant Pot doesn't have a "Pressure Level" button). Press the +/- buttons until the display says 00:04 for 4 minutes. The Instant Pot will say "On" until it's up to pressure (takes about 30 minutes with this much cold liquid), then will start counting down.
While the Instant Pot is coming up to pressure, prepare a large colander by lining it with a folded over cheesecloth. I use a large cheesecloth folded into quarters for this step. Place the prepared colander in a sink with a drain.
When the Instant Pot is done cooking, naturally release for 10 minutes. This means that you just need to leave it alone while it starts counting up. When it says "L00:10" release any remaining pressure by opening the pressure release valve. Take off the lid when the pressure is released. The mixture should look cloudy and chunky. If it still looks smooth like milk, add an additional 1/4 cup of vinegar and stir.
Press "Cancel" to turn off the Instant Pot. Using pot holders, carefully take the stainless steel pot out of the Instant Pot and slowly pour the mixture into the prepared colander.
Once most of the whey has drained out, rinse the mixture with cold water to remove the vinegar flavor and cool the paneer so you can squeeze out the rest of the water and whey.
Once the paneer has cooled down significantly, sprinkle some salt into the mixture. Then carefully gather up the corners of the cheesecloth and twist the ball of cheese to squeeze out the excess liquid.
Once you've squeezed out all the liquid you can by hand, place the cheesecloth ball on top of several kitchen towels. Put some more towels on top and weigh it down with something heavy (I use a cast iron pan). Leave it sit for an hour or two.
Then you can unwrap and cook with the paneer. If you won't use the paneer right away, refrigerate in the cheesecloth covered in a kitchen towel so it doesn't dry out.