You are using a low-level keyboard hook, which runs in-thread. Therefore, when you call GetKeyboardState you are getting the state of your own local keyboard, not the state of Notepad's keyboard. If you want to continue along this route, you need to track the shift key states manually.
Why not just process normal keyboard messages in your application? Why do you need a global hook? If you process them normally, then shift key processing will have occurred and when you call GetKeyboardState you will see the appropriate key states.
Converting raw keyboard activity into typed characters is notoriously difficult. In addition to shift key states, you have to worry about Caps Lock and IMEs.
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