You can use Bentley's "msbatch.bat" (which is located on the program root folder when you install microstation) to convert dgn to dwg and vise versa. This is a DOS batch file that can be launch without the microstation gui. A file "*.BNCV" is what you need to control the batch file. In this bcnv file, you would specify the locations of the .dgn and .dwg seed/template files(2D and 3D), autocad fonts, a *.csv file that have all the conversion options (ability to map or rename layers/levels, color, blocks/cells, text/fonts, etc. ), and the list of files (*.dgn/*.dwg) to convert and where to put the converted files. As a side note, Microstation v8.5.235 and autocad2005 sp1 seems to be the best combination.
Sample syntax:
msbatch batchconvert C:\Temp\MyBatchConvert.bcnv
or
"C:\Program Files\Bentley\Program\MicroStation\msbatch.bat" batchconvert C:\Temp\MyBatchConvert.bcnv
A BCNV file is a normal .txt format and should look like the one below. It is a working .BCNV file that I can almost guarantee to work as long as you have the required .dgn, dwg, csv files path correctly. You can name the bcnv file anything you want as long as it has a .bcnv extention. In this example, the word "DESTFMT" dictates the conversion format. I have file1.dwg to convert to dgn and file2.dgn to convert to dwg.
[DEFAULTDESTINATIONDIR=C:\Temp\
[DEFAULTDESTINATIONFILETYPE=DWG]
[LOGFILE=MS_TMP:batchconvert.log]
[CLEARLOGFILE=1]
[SETTINGS=dwgOpenGlobals]
designBackgroundColor.red=0
designBackgroundColor.green=0
designBackgroundColor.blue=0
sheetBackgroundColor.red=255
sheetBackgroundColor.green=255
sheetBackgroundColor.blue=255
dgnSeedFile=C:\transeed.dgn
archEngUnitsMode=1125
decimalUnitsMode=2075
normalCellMode=0
flags.openPaperSpaceAs2D=0
flags.openModelSpaceAs2D=0
flags.disableUnitsDialog=0
flags.setAxisLockFromOrthoMode=0
flags.disallowLogicalNameFromXRefBlockNames=0
flags.useWeightMap=1
flags.displayWeightsInInches=0
flags.discardInvalidEntities=0
dgnToDWGLineWeights[0]=0
dgnToDWGLineWeights[1]=13
dgnToDWGLineWeights[2]=30
dgnToDWGLineWeights[3]=40
dgnToDWGLineWeights[4]=53
dgnToDWGLineWeights[5]=70
dgnToDWGLineWeights[6]=80
dgnToDWGLineWeights[7]=100
dgnToDWGLineWeights[8]=106
dgnToDWGLineWeights[9]=120
dgnToDWGLineWeights[10]=140
dgnToDWGLineWeights[11]=158
dgnToDWGLineWeights[12]=158
dgnToDWGLineWeights[13]=158
dgnToDWGLineWeights[14]=200
dgnToDWGLineWeights[15]=211
dgnToDWGLineWeights[16]=211
dgnToDWGLineWeights[17]=211
dgnToDWGLineWeights[18]=211
dgnToDWGLineWeights[19]=211
dgnToDWGLineWeights[20]=211
dgnToDWGLineWeights[21]=211
dgnToDWGLineWeights[22]=211
dgnToDWGLineWeights[23]=211
dgnToDWGLineWeights[24]=211
dgnToDWGLineWeights[25]=211
dgnToDWGLineWeights[26]=211
dgnToDWGLineWeights[27]=211
dgnToDWGLineWeights[28]=211
dgnToDWGLineWeights[29]=211
dgnToDWGLineWeights[30]=211
dgnToDWGLineWeights[31]=211
[SETTINGS=dwgSaveGlobals]
dwgVersion=9
unitsMode=1001
dwgSeedFile=C:\Design_Model_seed.dwg
hatchMapFile=
shapeFilePath=C:\Program Files\AutoCAD\fonts
convertFonts=0
regionMapping=2
convertReferences=0
levelDisplayMode=0
useLevelSymbologyOverrides=0
linearPatternedComponentMapping=0
constructClassMapping=1
patternClassMapping=0
linearPatternedClassMapping=0
flags.disallowScaledBlocksFromCells=0
flags.createExtrusionsFromProjectedSolids=0
flags.saveEntitiesFromNewerVersions=0
flags.noCreateSingleBlockFromDuplicateCells=0
flags.createOverlaysFromAllAttachments=1
flags.dropUnsupportedLineStyles=0
flags.createSolidsFromTriForma=0
flags.createPolylinesFrom3Or4SidedShapes=0
flags.noDropUnsupportedAreaPatterns=0
flags.saveApplicationData=0
flags.saveMicroStationSettings=0
flags.saveReferencePath=1
flags.convertEmptyEdfToSpace=0
flags.disallowSetUCSFromCurrentACS=0
fflags.createBlockDefinitionsOnLayer0=0
flags.createBlockDefinitionsWithByBlockColor=0
flags.createBlockDefinitionsWithByBlockWeight=0
flags.createBlockDefinitionsWithByBlockStyle=0
flags.disallowSaveXData=0
flags.disallowBlockNameFromTriForma=0
flags.disallowSaveDimensionSettings=0
flags.saveFrontBackClip=0
flags.forcePositiveExtrusionForClockwiseArcs=0
flags.saveSheetsToSeperateFiles=0
flags.createADTObjectsFromTriForma=0
referenceMergeOptions.view=0
referenceMergeOptions.mergeSelfAttachments=1
referenceMergeOptions.mergeNonDefaultModelAttachments=1
referenceMergeOptions.mergeExternalAttachments=1
referenceMergeOptions.mergeMaskedAttachments=1
referenceMergeOptions.mergeSheetAttachments=0
referenceMergeOptions.copyLevelMode=1
referenceMergeOptions.initialized=1
referenceMergeOptions.copyNestedAttachments=1
referenceMergeOptions.allowOptimizedClip=0
nonDefaultModelMode=2
codepage=1252
previousOSCodepage=1252
dxfPrecision=16
elementMapping.initialized=1
elementMapping.planarLineStrings=0
elementMapping.nonPlanarLineStrings=0
elementMapping.curvedSolidsOrSurfaces=0
elementMapping.flatSolidsOrSurfaces=1
filledMapping.initialized=1
filledMapping.triOrQuad=4
nfilledMapping.polygon=2
filledMapping.complexShape=2
filledMapping.groupedHole=2
unfilled2dMapping.initialized=1
unfilled2dMapping.triOrQuad=0
unfilled2dMapping.polygon=0
unfilled2dMapping.complexShape=0
unfilled2dMapping.groupedHole=1
unfilled3dMapping.initialized=1
unfilled3dMapping.triOrQuad=4
unfilled3dMapping.polygon=0
unfilled3dMapping.complexShape=1
unfilled3dMapping.groupedHole=1
lineCodeScale=0.000000
lineWeightScale=0.275000
polyfaceStrokeAngleTolerance=30.000000
constructionClassSuffix=(Construction)
patternClassSuffix=(Pattern)
linearPatternedClassSuffix=(Linear Patterned)
lineStyleMapping=
textStyleTemplate=
[SETTINGS=g_remapOptions]
remapFileName=C:\lvlmap.csv
destV8.remapLevels=1
destV8.remapFonts=1
destV8.remapLineStyles=1
destV8.remapColors=0
destV8.remapWeights=0
destV8.remapCellNames=0
destDwg.remapLevels=1
destDwg.remapFonts=1
destDwg.remapLineStyles=1
destDwg.remapColors=0
destDwg.remapWeights=0
destDwg.remapCellNames=0
destV7.remapLevels=0
destV7.remapFonts=0
destV7.remapLineStyles=0
destV7.remapColors=0
destV7.remapWeights=0
destV7.remapCellNames=0
[SETTINGS=gMergeOptions]
mergeV8.view=-1
mergeV8.mergeSelfAttachments=0
mergeV8.mergeNonDefaultModelAttachments=0
mergeV8.mergeExternalAttachments=2
mergeV8.mergeMaskedAttachments=0
mergeV8.mergeSheetAttachments=0
mergeV8.copyLevelMode=0
mergeV8.initialized=0
mergeV8.copyNestedAttachments=0
mergeV8.allowOptimizedClip=0
mergeV7.view=-1
mmergeV7.mergeSelfAttachments=0
mergeV7.mergeNonDefaultModelAttachments=0
mergeV7.mergeExternalAttachments=0
mergeV7.mergeMaskedAttachments=0
mergeV7.mergeSheetAttachments=0
mergeV7.copyLevelMode=0
mergeV7.initialized=0
mergeV7.copyNestedAttachments=0
mergeV7.allowOptimizedClip=0
convertReferencesV7=0
convertReferencesV8=0
allowOptimizedClip=0
noRelativePathsV7=0
noRelativePathsV8=0
noRelativePathsDWG=0
dontRemapRefNamesV7=0
dontRemapRefNamesV8=0
dontRemapRefNamesDWG=0
[SOURCE=C:\Temp\FILE1.dwg]
DESTFMT=V8
DESTDIR=C:\Temp\_CONVERTED_DGN
[SOURCE=C:\Temp\FILE2.dgn]
DESTFMT=dwg
DESTDIR=C:\Temp\_CONVERTED_DWG