If you open Dictionary preferences, there is an option to Open Dictionary panel. When you use your shortcut, rather than opening the application, a little definition window will appear next to the word you are performing the search on. I believe this is what afb is referring to.
afb - what happens if you change the shortcut to something else? Mine is Command-F8 to avoid a conflict with something else that is using control-command-D. Does it still not work or does it start working properly?