Using Cubase 10.5.20 on Windows 10.
Get a “Sample Science” vst3 instrument that includes an “instruments” folder for the presets, etc. Remove the ‘.instruments’ folder that comes with it so that only the vst3 file is in the vst3 subfolder.
In Cubase add that instrument as a new instrument track. There should be a popup saying “No Instruments Found”.
Now try to add another instrument track and the VST list dropdown flashes away. I am using a custom list if that makes any difference, not the default list generated by Cubase.