Partha,
I use window.open() extensively in my applications, and it never causes the user to lose a session. In this case, I'm writing only for Microsoft Internet Explorer with no other browsers supported, and using WebSphere V 5.1 as an application server. I'd be interested to know what environment you're using that causes you to lose a session when you pop up a window using window.open().
I understand the desire to have the popup window always on top, but I haven't had a big problem with my users hiding the window or ignoring it and working on the main window.
The main problem with using a modal dialog is the one you're encountering: When you submit the form, it will not go back to the same window, but open up a new one. The only way around this seems to be to use Dom Lassy's suggestion in the other
thread (see the link in my previous post), which is to use an <IFRAME> inside your modal dialog, and specify the name of the iframe as the target of the form action.