My train of thought was same as geevo41 .... but after a "debate" with the missus, she's pointed out that the "is" is already being used in the sentence ("isn't") ...... so you're effectively saying "is" twice ... so now it looks like i'll be eating humble pie and admitting that the 2nd one is correct.
If the "isn't" wasn't being used, then it would be correct to say "that's why" .... but I don't think it's correct to say "isn't that's why".
Unless anyone convinces me otherwise .... the 2nd one gets the vote
It's not often that I get caught out on grammar, even if I say so myself, but I admit in this case I was wrong. Of course ,removing all the apostrophes reads: Is that not why.....
Hangs head in shame and blames effects of Shiraz