Ran a test of this and found that the type change from Magic Powder does not get passed if the affected Pokemon uses Baton Pass. The combo of Magic Powder + Spectral Thief does work to hit normal types, though.
But if you're already going to be running Infiltrator to hit Magic Powder through Substitute, you're probably better off going for Topsy-Turvy or Clear Smog to stop normal types from setting up. Or Haze, which ignores Substitute even without Infiltrator.
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