Could the issue be that the button assignments are still set to the default for V8i?
That being that the middle button is not a tentative but a middle button pan.
You can test by trying the two button chord, which is mapped to the tentative snap, in the default V8i button mapping. If that is the case, you can swap the mapping so the two button chord is Xbutton1 and the middle button will revert to being a tentative snap.
Now, for my $0.02 worth. Adding extra functionality to a tool using a standard interface item in a novel manner is probably not the greatest of ideas. A tentative snap is a pretty critical tool and ordinarily does one thing only. I will admit to using ACADPAN.MA which makes a tentative drag into a AutoCAD like Pan, but it does so without changing the default behavior of a tentative snap. If a user needs to snap with your tool and does not want the alternative operation to occur, what to they do?
MicroStation has a workflow and interface that functions in a predictable manner. Making a custom tool that does not "act like MicroStation" is something I cannot imagine is conducive to consistent workflows.
Just saying...