this has been answered by me in a different forum, but here goes:
Place GRAYSCALE Tif file. With the direct selection tool (white arrow, not the black arrow) select the tif. Apply a spot color from your swatch palette, or a CMYK mix from the color palette. That's it.
The difference between the two selection arrows is: black arrow select the frame, or box that contains graphics or text. the white arrow selects the contents of the frame or the actual nodes of a placed or drawn vector graphic.
If you select the grayscale image with the black arrow and then color it, you have essentially color the background or stroke of the box, but the image remains unchanged. With the white arrow you can color the image itself and it's background.