It worked fine for me. I've given it to my theif, and they cant see him ever if he hides in the shadows and I've had true sight cast on him loads of times.

Well, I have the Cloak of Non-Detection on my Mage-types usually, taking advantage of its anti-detection capability.

True Sight has NEVER dispelled any invisibility for a wearer of the Cloak. The reason you may be having problems with Thief-types is that they must have Shadows to hide in. They have to check each round to remain in Shadows. The Cloak does nothing for a Thief in broad daylight.

Its also possible that if you set your thief to backstab, that he missed with a high initiative, which means he would pop into visibility and be targetable, same as if a mage cast a spell while invisible. The Cloak only protects from "hostile" detection attempts, any hostile action on behalf of the wearer (including failing a Hide in Shadows roll) negates stealth/invisibility.

Hope this helps!