Suppose someone took a tea-spoon of powdered milk, reconstituted it into normal milk, and accidentally dropped some of it on meat. Do we measure the bittul of the resulting mixture against the powder or against the "reconstitution"?
The OU says that powdered milk, when evaluating bittul, they look at the powdered form, not the reconstructed amount (unlike grape juice concentrate where they look at the volume when reconstructed).
However, in the case you present, the milk was reconstructed prior. That is more a case of Chanan, which does not apply here because it only applies to Issur (which youre case is ostensibly not) and even if the milk was not Cholov Yisroel, according to the OU anyway.
I'd say the reconstitution. "Foodstuffs" are batel 1:60 by volume. "Flavorings" aren't batel until you really can't taste them. The question is which way concentrates go -- and I assume powdered milk is stronger than a "foodstuff."
The question came up with regards to some beer that was being run on the same line as ... clam juice, I think? Some of the ingredients were concentrated, so the question of bitul came up there.