"Institutional" or "structural" racism doesn't just mean racism by one or two people in power. It's the idea that the majority of society demonstrates some kind of racial bias, by whatever means.
Society is made up of people.
One of two things must, logically, be true:
1. A SUBSTANTIAL portion of the people who make up society exhibit some kind of racist behavior, or
2. Structural racism is not a widespread issue
Which one of these two propositions must one believe is likely if one is researching the impact of structural racism? Keep in mind people do not generally don't go looking for things they do not believe exist.
In other words, people don't like other people believing they-en-masse discriminate (even IF they do), so taking actions that only make sense if you think that poorly of the everyman offends them. It's not about what someone wants to be true, it's that investigating implies a level of distrust in society some members of that society find uncivil.
To use a blunt analogy, "why not let me check your underwear to make sure you haven't soiled it? Do you just not want it to be true?".
The Parable of the Polygons is a cute case study that shows that it is possible, in a mathematical sense, to prefer diversity and yet end up segregated: https://ncase.me/polygons/
The whole point of studying institutional and structural racism is that no one needs to be racist per se to have racially discriminatory outcomes. Perhaps a good analogy is the higher mortality rates among left-handed people. We no longer persecute them and drive them out of society or beat them for their sin, and yet, they die earlier due to structural factors.
I agree with you that "people don't like other people believing they-en-masse discriminate." And that's why science in the US is f*(&ed, because somehow everyone takes intellectual inquiry as some sort of personal affront or verdict on individual virtue, and that's the one thing the American cannot abide, the thought that someone else is judging them and finding them wanting.
I'm not one to argue.
Is "institutional racism" when institutions do treat individuals differently on the basis of race, or when they make sure not to?
I'm used to seeing that term in context of advocating for explicit double standards.