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Microstation files can be created with file extensions other than DGN. These files can be recognized by ArcGIS by checking on an ArcCatalog option found under Tools > Options > CAD tab > Examine all file extensions.
At version 9.0, checking on this option does not allow the files to be listed.
This is a known issue.
Place a recognized CAD format file with a standard DWG, DXF or DGN extension in the same folder as the other Microstation files. Refreshing the directory now lists the additional Microstation files.