The Start Modal Dialog VI currently needs to be placed on the block diagram of the VI that needs to be modal. This means that you can't put it in a subVI with logic around it. If a VI reference input were added to the VI (with the default being the calling VI) then you could keep the same functionality but have the option of calling this from a subVI.
For those that are running into this, there used to be a workaround here:
http://forums.ni.com/t5/NI-TestStand/Make-Window-Modal-from-SubVI/m-p/492445/highlight/true#M14451
But the link in this forum is now broken. I'll post back if I find the answer.
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