Your problem is that your code is passing Finder references to InDesign. InDesign doesn't understand Finder references, so it throws them back to the Finder, which then does the opening -- it's as if you double-clicked on the file.
You need to pass InDesign an alias or path, like this:
tell application "Finder"
set theFolder to window 1
set theFiles to (every file in theFolder whose name ends with ".indd") as alias list
on error -- happens if there's only one
set theFiles to (every file in theFolder whose name ends with ".indd") as alias as list
tell application "Adobe InDesign CS3"
set user interaction level of script preferences to never interact
--begin processing the files in the open window
repeat with i from 1 to count of theFiles
open (item i of theFiles) without showing window
close document 1 saving no
Shane Stanley <firstname.lastname@example.org>
AppleScript Pro Sessions <http://scriptingmatters.com/aspro>
...And circle gets the square!
Nice work as always, Shane. That one had been perplexing me for a while now, but when you explain it, it makes complete sense and I should have realized that passing the references back and forth that way would muddy the waters. Today I will be going back and fixing that on a ton of my scripts. Thanks a lot, Shane!!