sounds like you have nested xrefs. are you trying to bind xrefs to a drawing, or trying to bind a drawing containing xrefs to another drawing as a new xref?
i can only guess that one of the Xref-ed files is somehow corrupted. I was able to bind a regular xref and nested x-refs as well w/ no problem. I even tried making the various xref dwgs read-only and still had no prob.
sorry i couldn't offer more help.
sd
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