In our May road trip this spring, I am staying in Estes Park, Co and driving to Red Cliffs Lodge in Moab (about 400 miles). Originally I was going to stay in Vail just to have a layover on the way. I could alternatively stay in Grand Junction. Where would be the most interesting and at the same time make the second day to Moab as short as reasonably possible. I would like to spend as much time at the Red Cliffs Lodge as I can in an overnight stay.

During what part of May are you doing this?

Grand Junction is very pleasant with many hotel options. As Grand Junction is a popular overnight, make your reservations early and don't expect any bargains. Grand Junction gets you much closer to Moab.

Grand Junction or Fruita get you pretty close and would have some interesting things to do. You can drive through Colorado National Monument or visit the Dinosaur Museum. I'd recommend driving Hwy 128 to Moab from there rather than 191 as it's much more scenic and only adds about 15 minutes to the trip.

Since you have Interstate Highways almost all the way to Route 191 leading into Moab, why not drive the entire 400 miles and find a one-nighter in Moab then you'll have the entire day. MapQuest puts it at 402 miles or 6 hours, 42 minutes.
However, if you really want to stop elsewhere, Grand Junction makes it a much shorter drive on the second day.