I'm constantly hitting this problem but finally had a moment to throw a minimal scene together to illustrate. I must have something simple wrong.
If I have a bunch of points in an Instance Node, and I animate them, I can see them animating fine while inside the Instance node itself. Jump up out of it, and choose an object to instance, and the animation no longer updates the viewport. All my instances display OK, but they never update their positions onscreen unless I toggle the Instance Node's display flag.
Try it: open the file, and play the animation: nothing happens. Toggling the node's display flag makes it update properly (even while playing!).
Dive into the Instance Node to see what it's supposed to look like - it'll animate fine.
And it renders fine - just doesn't work interactively in the viewport.
Am I missing a setting? Or does it work fine for you?
h / 16.5.571