Clients require instance name to connect to clustered instance
From further research, it appears the issue may be a result of older SQL clients performing an "InstanceValidity" check when connecting to SQL Server (specifically sqlsvr32.dll driver). The driver passes "MSSQLServer" as the instance to verify for the InstanceValidity check.  In this case, since the instance name listening on the Default port (1433) is named "Instance1", the check fails because the Instance names do not match the InstanceValidity check.

Specifying the port number or instance name explicitly in the connection string works.