I have an interesting problem I have not seen before. I'm using AutoCAD 2011.
When using object snap to lines in an xref, I'm finding that I cannot snap to one particular layer in the XREF if and only if the XREF is rotated. If it is at zero rotation, object snap works perfectly for all layers. After rotating, I can no longer snap to the one particular layer in question. If I rotate it back to zero rotation, snap works again. That layer is nested a couple of xref's deep, but other layers from the same file snap just fine.