I remember very little of the movie now, but I do remember that near the end of the movie, the main character (a young boy) escapes a dungeon/castle using an invisible cloak or something else that made him invisible? The main character was somehow transported from the real world into a fantasy world. I think the theme music/soundtrack had cool flute music, but not positive. I know this is very vague, hopefully someone can give me some ideas. I guess one of the most definite facts I know is that the movie can not have been made later than 1991 prob, since we watched it on a vhs in elementary school. Help meeeeeeeeeeeeeeeee!

Could it have been the pagemaster?

Nah, that wasn't it; Pagemaster was made in 94 and I think parts of it were animated. As far as I remember, the movie I saw was live-action. If this is a hint, it seems it would have been relatively popular if a teacher chose it for her 1st/2nd grade class to watch it.

Why, this is none other than our old friend Mio and the Land of Faraway, which includes your plot points of a kid slipping into a fantasy world in which there is both plenty of flute music and a cloak of invisibility. One of Christian Bale's very first movie roles!

It's amazing how often this movie comes up! I didn't realize that this movie got around as much as it did because it's not a more well known movie. This movie is incredible though, and one of my all-time favorites!

It sounds a little like "The Neverending Story II"

Yeah, but it's not though!