as rdklincorporated suggess you probably forgot to check the magnet location before closing the ibook top case. In fact there's only one magnet that triggers the sleep function. The top case magnet enter in contact with the reed switch board when closing the display and triggers the sleep function. The reed switch cable is part of the inverter cable going from the logic board to the inverter board in the display via the right hinge.
To test the reed switch board just pass a magnet over the center right side of the display and it should put your ibook in sleep mode. If it doesn't work then the reed switch board could be faulty but I'm pretty sure rdklincorporated answer is right. My advice would be to take off the top case and put back the magnet at the location described by rdklincorporated. I would spread just a little super glue under the magnet to be sure it will stay in place.