The following code works fine in Delphi 7. However, in Delphi 2009 the form does remain hidden but the button on the taskbar is now appearing.
ShowWindow(Han
Turns out the reason we were seeing the Application window on the taskbar was a simple setting similar to stukelly's answer but not quite.
To get the main form to appear on the task bar and hide the application menu you apply:
Application.MainFormOnTaskbar := True;
Application.ShowMainForm := False;
No code behind the form create or anything required.