Problem: DGN (design) files created in MicroStation v8 do not draw in ArcMap
DGN files added to ArcMap from MicroStation version 8i do not display in ArcMap.
The DGN files must be compressed in MicroStation version 8i before the features display properly in ArcMap.
Solution or Workaround
Use the MicroStation version 8i command 'Compress Design'.
Note: Contact the manufacturer, Bentley Systems, for further technical assistance with MicroStation products.
In Microstation, click File > Compress > Design. After compressing the file, save the file again. The compressed file draws properly in ArcMap, and converts to geodatabase using the CAD to Geodatabase tool in ArcToolbox.