I'm having the same problem with my computer. I think it is because Windows isn't seeing the computer as ACPI compatible.
It is definitely something with Windows and not your power supply. It's seeing the momentary switch as a 'hard off' and the bios just kills power to the mobo.
Are you using Windows XP?
Check your device manager and under 'Computer' make sure it says ACPI somewhere in the description. If it just says "Standard PC" like mine does, Windows is not Auto-detecting your bios is ACPI compatible.
If this is the case, you have to reinstall Windows to change the ACPI driver. Basically in the Windows setup when it asks you to press F6 to install 3rd party raid or SCSI drivers, you hit F5 and after a few seconds it will go to a screen where you can pick your computer type. Hit the up and down arrow keys and choose 'ACPI Uniprocessor PC' or 'Advanced Configuration and Power Interface (ACPI) PC'.
I tried choosing the 'Advanced Configuration and Power Interface (ACPI) PC' option and Windows setup didn't finish properly, so I'll have to try the other option, but I've heard this is a way to enable the 'Power Buttons' option in the Power Options settings.
Hope this helps....
I'll let you know if I get mine working...