Problems like this will turn out to have simple solutions. Once we get past the idea of "inherited instinct" (obvious nonsense and easily proved to be so) the solution will be easier to see.
An example that might be useful: dragonflies lay their eggs in water. Since a dragonfly has like a 4-bit CPU you might be amazed at how it manages to get all the processing required to identify a body of water from a distance into its tiny mind, and also marvel at what sort of JPEG+++ encoding must be used to convey what water looks like from generation to generation.
But they don't do that at all: instead they have eyes that are sensitive to polarized light. The surface of water polarizes reflected light. So do things like polished gravestones. So dragonflies will lay their eggs on gravestones too.
One I like to ponder is: beavers building damns. Do they have an encoded algorithm that knows that they need to damn the river to have a place to live, by gnawing on trees, carrying them to the right place on the river bed, etc? Nope, certainly they don't have that. Perhaps they have teeth that grow so long that they hurt, motivating the animal to gnaw on something solid to wear them down. The only solid thing they have available is a tree.