I've had an issue with this as well. So frustrating!
Here's the "solutions"...
1. If the layer manager is docked, it will work fine.
2. If you change the color, then click the layer to select it, then it will change.
Both seem pointless in its own respective manner...Now that I have docked and undocked the layer manager, it seems to work fine. Weird. I can't recreate the issue. Perhaps I inadvertently found a work around? Maybe you can try it and reply with your results. I'd like to know if that helps you.
Ok, I was joking...ignore my previous post. I found that it has to do with the order of setting new layer properties. When you start a new layer, change the color first. Then, change the name. I tend to change the name and then the color. This will have to take some getting used to.
In my case, layer color did not change on several tries. What worked is: in layer manager, try to change layer color, it won't work, press apply, then try to change the color again and this time it works. This is in AutoCAD 2007.
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