OK, I've reproduced the problem in a small application (the application is
appended to the end of the post) and then took a closer look at the original
application.

The problem is NOT with a toolbar button, as I originally thought, it's with
a button that is a child of the main form (the MDI container).
this button can open the form, change it WindowState (if you uncomment that
statement) , but it seems like the SendMessage() function does not work
properly if called from the click event handler of that Button.
the SendMessage() does work if it is called from the event handler of the
menu or from the click event handle of a toolbar button (NOT included in the
appened example).

this is very strange.

Nadav

=============== appended code =============

using System;
using System.Drawing;
using System.Collections;
using System.ComponentModel;
using System.Windows.Forms;
using System.Data;
using System.Runtime.InteropServices;

namespace test_MDI_bug
{
    /// <summary>
    /// Summary description for Form1.
    /// </summary>
    public class Form1 : System.Windows.Forms.Form
    {
        private System.Windows.Forms.MainMenu mainMenu1;
        private System.Windows.Forms.MenuItem menuItem1;
        private System.Windows.Forms.MenuItem menuItem2;
        private System.Windows.Forms.Button button1;
        /// <summary>
        /// Required designer variable.
        /// </summary>
        private System.ComponentModel.Container components = null;

        public Form1()
        {
            //
            // Required for Windows Form Designer support
            //
            InitializeComponent();

            //
            // TODO: Add any constructor code after InitializeComponent call
            //
        }

        /// <summary>
        /// Clean up any resources being used.
        /// </summary>
        protected override void Dispose( bool disposing )
        {
            if( disposing )
            {
                if (components != null)
                {
                    components.Dispose();
                }
            }
            base.Dispose( disposing );
        }

        #region Windows Form Designer generated code
        /// <summary>
        /// Required method for Designer support - do not modify
        /// the contents of this method with the code editor.
        /// </summary>
        private void InitializeComponent()
        {
            this.mainMenu1 = new System.Windows.Forms.MainMenu();
            this.menuItem1 = new System.Windows.Forms.MenuItem();
            this.menuItem2 = new System.Windows.Forms.MenuItem();
            this.button1 = new System.Windows.Forms.Button();
            this.SuspendLayout();
            //
            // mainMenu1
            //
            this.mainMenu1.MenuItems.AddRange(new System.Windows.Forms.MenuItem[] {
                                                                                     this.menuItem1});
            //
            // menuItem1
            //
            this.menuItem1.Index = 0;
            this.menuItem1.MenuItems.AddRange(new System.Windows.Forms.MenuItem[] {
                                                                                     this.menuItem2});
            this.menuItem1.Text = "test";
            //
            // menuItem2
            //
            this.menuItem2.Index = 0;
            this.menuItem2.Text = "test1";
            this.menuItem2.Click += new System.EventHandler(this.menuItem2_Click);
            //
            // button1
            //
            this.button1.Location = new System.Drawing.Point(48, 8);
            this.button1.Name = "button1";
            this.button1.TabIndex = 2;
            this.button1.Text = "button1";
            this.button1.Click += new System.EventHandler(this.button1_Click);
            //
            // Form1
            //
            this.AutoScaleBaseSize = new System.Drawing.Size(5, 13);
            this.ClientSize = new System.Drawing.Size(292, 272);
            this.Controls.Add(this.button1);
            this.IsMdiContainer = true;
            this.Menu = this.mainMenu1;
            this.Name = "Form1";
            this.Text = "Form1";
            this.ResumeLayout(false);

        }
        #endregion

        /// <summary>
        /// The main entry point for the application.
        /// </summary>
        [STAThread]
        static void Main()
        {
            Application.Run(new Form1());
        }

        //
        // In MDI Parent form class declaration
        //
        [DllImport("User32")]
        private static extern bool SendMessage(IntPtr hWnd, int msg, int
            wParam, int lParam);

        private const int SC_RESTORE = 0xF120;
        private const int WM_SYSCOMMAND = 0x0112;

        Form f=null;
        //
        //  This is the menu click event to display the form.
        //
        //
        private void Restore() {
            //
            //     If it is already loaded, set it, otherwise set it to null
            //  so we can load it next.
            //

            if (f == null) {
                f = new Form();
                f.MdiParent = this;
                f.Show();
            }

            else {
                if (f.WindowState == FormWindowState.Minimized) {
                    SendMessage(f.Handle,WM_SYSCOMMAND, SC_RESTORE, 0);
                    //f.WindowState=FormWindowState.Normal;
                }
                f.Activate();
            }

        }

        private void menuItem2_Click(object sender, System.EventArgs e) {
            Restore();       
        }

        private void toolBar1_ButtonClick(object sender,
System.Windows.Forms.ToolBarButtonClickEventArgs e) {
            Restore();
        }

        private void button1_Click(object sender, System.EventArgs e) {
            Restore();
        }
    }
}