In 1989 Polaco made his most famous and controversial film, Kindergarten, starring Graciela Borges, Arturo Puig and Luisa Vehil.
The movie was banned from theaters by the Justice one day short of release and a prolonged trial ensued over eight years, emotionally devastating Polaco and his fellow workers.
Polaco remained active nonetheless, filming Siempre es difícil volver a casa (1992), his first major studio production, and La dama regresa (1996), which served as a comeback vehicle for retired actress Isabel Sarli.
2001 saw his comeback, making the short film El milagro with famed ballet dancer Julio Bocca, contributing to the anthology film Historias de Argentina en vivo (amongst Adrián Caetano, Marcelo Piñeyro, Bruno Stagnaro and Vicentico) and directing another feature-length movie, Viaje por el cuerpo, for which he was nominated for Best Screenplay and Best Art Direction at the Argentinean Film Critics Association Awards, and won a Golden Apple at the New York LaCinemaFe.
Polaco's Kindergarten was eventually released on the 2011 Mar del Plata Film Festival for the first time since its shooting over 20 years before.