When do I use toki (時)

The short answer is "sometimes". It is read "toki" when by itself or in words like 時々 and 時折. Sometimes it is "ji" as in 時間 or 時刻. You just have to memorize it.

Ok, i sometimes confuse it with itsu when used as "when"

As a general rule, most kanji have at least 2 ways to pronounce them--the "Kun" (pron. "koon"), or native Japanese word related to the kanji, and the "On" (pron. "own"), developed from the original Chinese word associated with the kanji when it was imported from China centuries ago (may not be similar to the current Mandarin word). Like Western culture looks back to Rome for its alphabet (which they developed from the Greeks), Japan looks back to China.

Just like we in English often use Greek or Latin forms when making compound words (e.g. an airplane with 2 wings is a "bi-plane", not a "two-winger"), the Japanese use the "On" readings ("Ji" in this case) for combinations like "ji-kan" (time interval), "dou-ji" (simultaneous), and use the "Kun" reading "toki" when used by itself. This is a general rule, with lots of exceptions (unfortunately!), but works 80-90% of the time. This saves a lot of memorization. If you choose wrong, don't worry--the Japanese often have the same problem, even with years of learning these things in school.

I agree with Fluvius. While on-yomi is more often than not a safe bet for a two-character compound, it is a craps shoot and you just have to memorize it. For example, 空手 is kun/kun (karate) not on/on (kuu/shu).

And, you can have mixtures of both. For example, 大黒柱 is daikokubashira, on/on/kun. Some levels of the Kanji Kentei present kanji compounds and then ask how the reading breaks down in on/kun terms.

I usually avoid learning kun and on because of those exceptions, so I prefer to memorize, thank you for the information :).

Japanese is much more difficult than Chinese. For example, 空手 can also be read in the following ways:
くうしゅ http://dictionary.goo.ne.jp/leaf/jn2/60408/m1u/空手/
そらで http://dictionary.goo.ne.jp/leaf/jn2/131596/m1u/空手/
むなで http://dictionary.goo.ne.jp/leaf/jn2/215744/m1u/空手/

Hmmm I think the difficulty of both is very similar, japanese has many pronunciations for every kanji, but chinese have intonation, katakana and hiragana make some things simpler, like conjugation, but another difficulty might be the particles. The sound of japanese is fluid but sometimes confusing, and chinesse pronunciation isnt that fluid. Japanese use traditional chinese characters while chinese uses simplified and sometimes traditional. And I believe chinese uses a little more hanzis in 1 reading than japanese with kanjis.

Hmmm, another difficulty are the counters, but i believe both languages have it
一 Ichi
一分 Ippun
ーつ. Hitotsu
一人 Hitori
Etc