Is it possible to use ShowDialog without blocking all forms?

Using multiple GUI threads is tricky business, and I would advise against it, if this is your only motivation for doing so.

A much more suitable approach is to use Show() instead of ShowDialog(), and disable the owner form until the popup form returns. There are just four considerations:

1. When ShowDialog(owner) is used, the popup form stays on top of its owner. The same is true when you use Show(owner). Alternatively, you can set the Owner property explicitly, with the same effect.

2. If you set the owner form's Enabled property to false, the form shows a disabled state (child controls are "grayed out"), whereas when ShowDialog is used, the owner form still gets disabled, but doesn't show a disabled state.

   When you call ShowDialog, the owner form gets disabled in Win32 code—its WS_DISABLED style bit gets set. This causes it to lose the ability to gain the focus and to "ding" when clicked, but doesn't make it draw itself gray.

   When you set a form's Enabled property to false, an additional flag is set (in the framework, not the underlying Win32 subsystem) that certain controls check when they draw themselves. This flag is what tells controls to draw themselves in a disabled state.

   So to emulate what would happen with ShowDialog, we should set the native WS_DISABLED style bit directly, instead of setting the form's Enabled property to false. This is accomplished with a tiny bit of interop:

   const int GWL_STYLE   = -16;
   const int WS_DISABLED = 0x08000000;
   
   [DllImport("user32.dll")]
   static extern int GetWindowLong(IntPtr hWnd, int nIndex);
   
   [DllImport("user32.dll")]
   static extern int SetWindowLong(IntPtr hWnd, int nIndex, int dwNewLong);
   
   void SetNativeEnabled(bool enabled){
       SetWindowLong(Handle, GWL_STYLE, GetWindowLong(Handle, GWL_STYLE) &
           ~WS_DISABLED | (enabled ? 0 : WS_DISABLED));
   }
   

3. The ShowDialog() call doesn't return until the dialog is dismissed. This is handy, because you can suspend the logic in your owner form until the dialog has done its business. The Show() call, necessarily, does not behave this way. Therefore, if you're going to use Show() instead of ShowDialog(), you'll need to break your logic into two parts. The code that should run after the dialog is dismissed (which would include re-enabling the owner form), should be run by a Closed event handler.

4. When a form is shown as a dialog, setting its DialogResult property automatically closes it. This property gets set whenever a button with a DialogResult property other than None is clicked. A form shown with Show will not automatically close like this, so we must explicitly close it when one of its dismissal buttons is clicked. Note, however, that the DialogResult property still gets set appropriately by the button.

Implementing these four things, your code becomes something like:

class FormB : Form{
    void Foo(){
        SetNativeEnabled(false); // defined above
        FormD f = new FormD();
        f.Closed += (s, e)=>{
            switch(f.DialogResult){
            case DialogResult.OK:
                // Do OK logic
                break;
            case DialogResult.Cancel:
                // Do Cancel logic
                break;
            }
            SetNativeEnabled(true);
        };
        f.Show(this);
        // function Foo returns now, as soon as FormD is shown
    }
}

class FormD : Form{
    public FormD(){
        Button btnOK       = new Button();
        btnOK.DialogResult = DialogResult.OK;
        btnOK.Text         = "OK";
        btnOK.Click       += (s, e)=>Close();
        btnOK.Parent       = this;

        Button btnCancel       = new Button();
        btnCancel.DialogResult = DialogResult.Cancel;
        btnCancel.Text         = "Cancel";
        btnCancel.Click       += (s, e)=>Close();
        btnCancel.Parent       = this;

        AcceptButton = btnOK;
        CancelButton = btnCancel;
    }
}

You can use a separate thread (as below), but this is getting into dangerous territory - you should only go near this option if you understand the implications of threading (synchronization, cross-thread access, etc.):

[STAThread]
static void Main() {
    Application.EnableVisualStyles();
    Button loadB, loadC;
    Form formA = new Form {
        Text = "Form A",
        Controls = {
            (loadC = new Button { Text = "Load C", Dock = DockStyle.Top}),
            (loadB = new Button { Text = "Load B", Dock = DockStyle.Top})
        }
    };
    loadC.Click += delegate {
        Form formC = new Form { Text = "Form C" };
        formC.Show(formA);
    };
    loadB.Click += delegate {
        Thread thread = new Thread(() => {
            Button loadD;
            Form formB = new Form {
                Text = "Form B",
                Controls = {
                    (loadD = new Button { Text = "Load D",
                        Dock = DockStyle.Top})
                }
            };
            loadD.Click += delegate {
                Form formD = new Form { Text = "Form D"};
                formD.ShowDialog(formB);
            };
            formB.ShowDialog();  // No owner; ShowDialog to prevent exit
        });
        thread.SetApartmentState(ApartmentState.STA);
        thread.Start();
    };
    Application.Run(formA);
}

(Obviously, you wouldn't actually structure the code like the above - this is just the shortest way of showing the behavior; in real code you'd have a class per form, etc.)