The difference between malai paneer and paneer

This is a recipe that we used for the concierge lounge when I was a chef in the main kitchen of the Disney's Grand Floridian Resort & Spa:

Paneer

5 cups whole milk

2 tablespoons lemon juice

Bring the milk to a boil, add the lemon juice so that the milk separates into the curds and whey.
Add a bit more lemon juice if necessary. Let set for approx. 5 mins.
Line a strainer with a cheesecloth and strain the milk.
Reserve the whey to use in curries instead of water.
Squeeze the excess whey out of the curd and fold the cloth around
the paneer to form a 4-inch square. Place the paneer on a
plate and place a heavy weight on top to squeeze out excess whey.
Leave for about 4 hours to set.

If you are using UHT milk, that is your answer right there. It won't make proper ricotta or mozzarella, so I'm not surprised it won't make good paneer either. Something about the heat treatment makes it so that it will only produce grainy, tiny curds. I made this mistake myself once, in my excitement to try my new cheesemaking kit. Here is some reference info, including pictures, from cheesemaking.com.