I can also confirm, and here is a link to a thread with more info about
my experience with this bug:

http://ubuntuforums.org/showthread.php?t=899590

I can also confirm that Compiz is not affected.  Windows open the way
they should when I use Compiz.

Here is my setup:
Fresh install of Ubuntu 8.04 Hardy Heron i386
Pentium 4 2.4Ghz
512MB RDRAM
Changed Visual Effects to "None"

Here is a video of the bug in action:

http://www.vimeo.com/1815384

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[hardy] new windows are put in background when a window has always on top set
https://bugs.launchpad.net/bugs/197288
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