I'm not sure that you're correctly describing what you're doing. An extension is a class that implements IExtension and is registered in the ESRI Mx Extensions component category. An extension will not affect any tools, commands, toolbars, or menus unless you write code inside the class to specifically do that.
You mention OnContextMenu. That is a method on the ITool interface. If you are creating a class that implements ITool, then that is a tool not an extension. You use OnContextMenu to provide the user with your own custom context menu for your tool. If you do this, then you need to make sure this method returns a value of True (in addition to displaying your menu). Otherwise, leave the method stub blank (or explicitly return a value of False) to leave the default context menu (if any) in place.
If you provide more information about what you're doing, someone might be able to help. You might also want to post your code.