Wow. This was a hard one. The problem seems to be that $button's setto is 
unable to process javascript macros. So to solve this requires processing 
the javascript macro using $Set like this:

\define setbutton()
<$button set="Test1!!somefield" setTo="$(setsort)$" >Set</$button>
\end
\define newone(ttext)
<$set name="setsort" value=<<setlowercase "$ttext$">> >
<<setbutton>>
</$set>
\end

<<newone "This IS a TeSt">>

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