Powdered milk has too much sugar? It's MILK. If you mix it to double stength, it'll be like drinking 2 glasses of milk, not milk with extra sugar.
Which is why it can be useful when bulking, you can cram a shitload of calories into a glass by fortifying a shake or a glass of milk with some powdered stuff.
Sure it's processed more than regular milk. So what? Any protein powder is more processed than dry milk.