I just created a windows forms project. Added an MDIForm, and 2 forms, dropped a button on the MDI surface and in the click event for the button did the following;
Dim form1 As New Form1
form1.Show()
Dim Form2 As New Form2
Form2.MdiParent = Me
Form2.Show()
And it worked as expected, Form1 appeared outwith the mdi and Form2 appeared in the mdi.