Nope, they are in separate folders, but both within the project folder.
Dwg is not attached to (with *.xml file) project.
I tried to same so that dwg is not under project and it WORKS.
Thanks for your idea Mason.
The source dwg which is to be attached, must not reside within project root or subdirectories.
(I tested dragging objects from open drawing and dropping them
into drawing. If a layout was open when target file was saved objects were placed in layout (paperspace). If model space was active then objects are placed in corresponding space !
Nice feature, but might cause some trouble...)
Message was edited by: jpeltone