When the variable is set to OFF (0), the entities manually set to a color show up that color, and no matter what you do in your Layer dialogue, you are stuck with that color. You will have to go in to the actual XREF drawing and change the items to color by layer.
When the variable is set to ON (1), the entities manually set to a color will show up as if they were properly set to color “Bylayer” and you will not have to go in to the actual XREF drawing and change the items to color by layer. This is nice, because with this setting turned on, you can control the colors in your drawing through the layer dialogue and do not have to touch the XREF. This goes for line types and layer visibility as well.
NOTE: Be sure to have your VISRETAIN variable set to “1” also.
Type or choose REVCLOUD command and then select “Modify” (M) option to add sections and remove (cleanup) sections of an existing revision cloud. Note: Where you pick on the existing revision cloud is where the modification starts. When you are all done, it is one cloud!
You could create a Script or even a LISP to monitor and set these settings (which I have done in the past), but for those that want a simple solution – BAM! this is it.
What about you?!