The internal class scope overrides the public MyClass() constructor scope, making the constructor internal.
Using public on the constructor makes it easier to update the class to public later, but confuses intent. I don't do it.
Edit 3: I missed part of your question. It is still fine to do that if your class is nested. The nesting can't make any difference, even if it is nested in a private class in a public class in a ... (see C# language specification - 3.5.2 Accessibility domains).
EDIT: And, if i recall, if the ctor is internal, it can't be used as a generic type where there is a constraint requiring where T : new(), this would require a public constructor (ref. C# language specification (version 4.0) - 4.4.3 Bound and unbound types).
Edit 2: Code sample demonstrating the above
class Program
{
    internal class InternalClass {
        internal InternalClass() { }
    }
    internal class InternalClassPublicCtor {
        public InternalClassPublicCtor() { }        
    }
    internal class GenericClass<T>
        where T : new() {}
    static void Main(string[] args) {
        GenericClass<InternalClass> doesNotCompile = new GenericClass<InternalClass>();
        GenericClass<InternalClassPublicCtor> doesCompile = new GenericClass<InternalClassPublicCtor>();
    }
}