There are multiple things to be considered here:
1.
When FBX'ing out a model from ACAD (or any other product allowing FBX export), you should ensure that materials/texture get properly exported with the model geometry (there should be a flag/setting for this within the export configuration). If that still doesn't work for your ACAD case, there might be a problem with the type of material you're using (not all types are supported by InfraWorks -- unfortunately I don't recall which at the moment; overs might chime in here).
2.
For proper geo-context (i.e. real-world geo-location and size), the 3d model should be equipped with that context/information already in order for InfraWorks to pick it up correctly, e.g.:
> model the 3d model using some geo-coordinate-system (either directly within the system or using some offset into that system)
> be aware of the used unit type (imperial: e.g. foot, metric: e.g. meter) you are modeling with (I don't know whether and which of the ADSK 3d modeling apps allow to specify to set and store the unit type with the exported FBX)
Geo-context information that is provided by FBX is automatically picked up by InfraWorks (i.e. the coordinate-reference system, the offset, geo-location, and scale should be automatically pre-populated within the import dialog). Missing information can/must be redeemed manually. This way geo-context aware 3d models can be directly imported (e.g. via drag&drop into the scene), without having to use helper GIS files (like your SDF).
I've heard a lot of people are using/preferring NavisWorks to FBX out 3d models that pertain/provide the relevant geo-context for InfraWorks to catch up.
3.
An 3d model style is an explicit 3d model-based replacement of the otherwise procedurally generated feature it is assigned to (Note: "Manual Style" property takes precedence over the "Rule Style" property).
In case of a building "procedurally" means creating facade geometries from the building feature's footprint segments and the currently assigned non-3d-model style, e.g.
> facade style: describes the floor/cells-arrangement (using a simply grammar) for the segment
> material: describes which texture/color to use for the segment
> color-string: describes which color to use for the segment
That means, if you drag&drop a material onto a building feature which currently uses a 3d model style for it's graphical representation within the scene (which is the equivalent to assigning the material/color to the "Manual Style" property), you are essentially switching back to the procedurally generated representation which uses the material/color for all of the building feature's footprint segment. That's why you see the building turning back to the simple block form after applying a material/color to it.
