When converting a non-grid raster dataset to a feature dataset, the .shp extension is appended to the end of the extension of the raster format by default (such as myoutput.img.shp). The feature will display fine with ArcGIS 8.1, but will not display as an available format in ArcView 3.2.
To work around the problem with basic ArcGIS 8.1, remove or replace the first period in the output file name for the output feature dataset. For example, replace myoutput.img.shp with myoutput_img.shp.
This problem has been resolved in ArcGIS 8.1 Service Pack 1.