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After georeferencing, why is the raster layer I created with Rectify invalid?
An ArcMap "invalid layer" error message or ArcCatalog crash was experienced when viewing the TIFF or Imagine output of a Recify operation on a georeferenced dataset. This outcome occurred when the resampling method for Rectify was set to Bilinear Interpolation.
The problem has been resolved in ArcGIS 8.1.2.
As an alternative, use Nearest Neighbour or Cubic Convolution as the resampling method.