You'r going about this all wrong: your code is trying to open a Form1 instance in an existing instance of Form2, and that won't work (because Form2 is a MDI Child) and isn't what you wanted anyway (because you want Form1 to be a child of the existing MDI container, not Form2).
What you actually need to do in your Form2 button handler is tell the MDI Parent that it should open a new Form1 (or repurpose the existing one, that's up to it, not the Form2 instance which should not even know that Form1 even exists!)
That sound complex, but it really isn't - it uses the same event mechanism that all controls and forms do:
Transferring information between two forms, Part 2: Child to Parent[
^] shows you how.
Though to be honest, MDI apps are few and far between these days, they were deprecated for new applications long, long ago back in the days of Win95 and Win 98 in favour of TDI (Tabbed Document Interface) which is generally considered to be much easier for users to understand and use. You probably shouldn't be constructing new ones unless you have very, very good reasons for doing so! (And even then, a "flexible panelised" app live Visual Studio is likely to be a better solution than MDI).
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