I'm not sure- I'm actually having the opposite occur.
In trying to use any of the ArcHydro Tools from the toolbar, none of them recognize my DEM layers.
However, if I go to the ArcToolbox, and try from the ArcHydro toolbox, all the tools recognize my DEM layers just fine.
Very strange. I'd prefer to use the toolbar, rather than the toolbox, but I suppose it will do for me.