The solution was to convert all DXFs to shapefiles, then do the merge. This
was suggested by Yousef Neyazi and Thomas Gonzalez. Ray Montgomery suggested
creating a new PRJ using the projection utility, but I did not attempt this.
Bill Huber recommended the Transform2D utility from www.quantdec.com, which
will also do the job.

Thanks very much to all who responded!

Cheers,
Justin

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Original question:
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Dear List:

I am experiencing difficulties with merging CAD themes in DXF format, and
I'm hoping someone can help me out. The DXF files are from the digital
Ontario Base Map (OBM) series and are in UTM. However, 4 million metres have
been subtracted from the northing values (I have no idea why), which means
the CAD base mapping does not align with our parcel fabric. I know the
solution is to apply a world file to shift all the CAD themes 4 million
metres to the north, and I have had great success with this. The problem is
that after I use XTools to merge the 240 georeferenced CAD themes, the
resulting merged shapefile draws at the location where the CAD drawings had
been before I applied the world file (i.e. 4 million metres to the south of
everything else).

It seems XTools ignores the world files when it merges DXF themes. I have
tried the Geoprocessing Wizard, which does not work for me at all. Perhaps
it can't handle 240 themes.

What am I doing wrong? Is there a way to force XTools to use the world file
information? Is there an alternative?

Any help would be much appreciated
Thanks,
Justin