From the java.awt.Window.setAlwaysOnTop(boolean) spec:

"When this method is called on a window with a value of false the always-on-top state is set to normal. The window remains in the top-most position but it`s z-order can be changed as for any other window. Calling this method with a value of false on a window that has a normal state has no effect. Setting the always-on-top state to false has no effect on the relative z-order of the windows if there are no other always-on-top windows."


Mini-Test:

/*
 * Copyright (c) 2011, Oracle and/or its affiliates. All rights reserved.
 */

import java.awt.*;
import java.util.concurrent.CountDownLatch;

/**
 * @author Alexey Fyodorov
 */
public class NormalStateRestoredTest {

    private static final int SIZE = 200;

    private Robot robot;

    public NormalStateRestoredTest() {
        try {
            robot = new Robot();
            robot.setAutoDelay(200);
            robot.setAutoWaitForIdle(true);
        } catch (AWTException e) {
            e.printStackTrace();
        }
    }

    public static void main(String[] args) {
        new NormalStateRestoredTest().test();
    }

    private void test() {
        Window alwaysOnTopWindow = null;
        Window anotherWindow = null;
        try {
            alwaysOnTopWindow = new SyncVisibleFrame();
            alwaysOnTopWindow.setSize(2 * SIZE, SIZE);
            alwaysOnTopWindow.setLocation(0, 0);
            alwaysOnTopWindow.setVisible(true);

            anotherWindow = new SyncVisibleFrame();
            anotherWindow.setSize(2 * SIZE, SIZE);
            anotherWindow.setLocation(SIZE, 0);
            anotherWindow.setVisible(true);

            robot.mouseMove(SIZE * 3 / 2, SIZE / 2);

            setAlwaysOnTop(alwaysOnTopWindow, true);
            anotherWindow.toFront();
            waitForTimeout();
            assert alwaysOnTopWindow.getMousePosition() != null;
            assert anotherWindow.getMousePosition() == null;

            setAlwaysOnTop(alwaysOnTopWindow, false);
            assert alwaysOnTopWindow.getMousePosition() != null;
            assert anotherWindow.getMousePosition() == null;

            anotherWindow.toFront();
            waitForTimeout();
            assert alwaysOnTopWindow.getMousePosition() == null;
            assert anotherWindow.getMousePosition() != null;
        } finally {
            dispose(alwaysOnTopWindow);
            dispose(anotherWindow);
        }
    }


    private void dispose(Window window) {
        if (window != null) {
            window.dispose();
        }
        waitForTimeout();
    }


    private static void waitForTimeout() {
        try {
            Thread.sleep(200);
        } catch (InterruptedException e) {
            e.printStackTrace();
        }
    }


    private void setAlwaysOnTop(Window window, boolean alwaysOnTop) {
        window.setAlwaysOnTop(alwaysOnTop);
        waitForTimeout();
    }

    private static class SyncVisibleFrame extends Frame {

        private final CountDownLatch latch = new CountDownLatch(1);

        @Override
        public void setVisible(boolean visible) {
            super.setVisible(visible);

            if (!visible) {
                return;
            }

            try {
                latch.await();
            } catch (InterruptedException e) {
                e.printStackTrace();
            }
        }

        @Override
        public void paint(Graphics g) {
            super.paint(g);
            latch.countDown();
        }

        @Override
        public void dispose() {
            super.dispose();
            waitForTimeout();
        }

    }
}

The following testcase will fail due to this issue:
api/java_awt/Window/indexTGF.html#AlwaysOnTop[normalStateRestored]