Improved Improve relies on tool icons to pick the correct tool. If you have two tools in the toolbelt that have similar icons (i.e. the carving knife and the knife), it may pick the wrong tool from the toolbelt which won't do anything as it isn't an improving tool.
The fix is simple. Clear items from the current toolbelt you're using and then only put tools in the current toolbelt that you need for what you're trying to improve.