The problem is that as soon as the first Form1 instance closes, your application shuts down and exits because the application message loop is defined with the initial Form instance, and it is just waiting for events on that form until it closes. On closing, the application will exit, opening a new form doesn't stop this process.
You need to adjust the Main() method in Program.cs to look something like this:
[STAThread]
static void Main()
{
// ... Application configuration as required here
new Form1().Show(); // The first form instance is now no longer bound to the Application message loop. Start it before we begin the run loop
Application.Run(); // Don't pass in Form1
}
Your original code should now work. I might add however, this is not a great user experience. Carefully consider what you're trying to achieve, and perhaps consider alternatives - do you just need a "reset form" button? Or is the primary goal to prevent a user from closing the application? If the latter, you can remove the Close icon altogether.