Imagine the following layer/sublayer structure in Illustrator CS3. All layers are visible and unlocked
Text labels - Streets - Buildings - Waterways Street centerlines top Street centerlines bottom
If I have an object on the layer Text labels, I can't drag the selection indicator in the layers pallette to the Streets sublayer. I can however drag it to the Street centerlines top layer and then to the Streets sublayer.
Does anybody have any idea why?