Adding new file types in ArcCatalog makes those files disappear from ArcGIS

Description

In ArcCatalog > Customize > ArcCatalog Options, there is a File Types tab, where new file types can be defined so that files with the new extension can be viewed in ArcGIS Desktop.

Adding any file type that is already recognized by ArcGIS to this area causes that file type to disappear from ArcGIS.

Cause

Adding a recognized file type to ArcCatalog > Customize > ArcCatalog Options > File Types tab creates a conflict within the software, and causes ArcGIS to 'forget' that the file type is already known.

As an example, adding the file type .PRJ to this area causes all projection files to disappear from ArcGIS. Projections cannot be defined, data cannot be re-projected, and in ArcMap, the projection of the Data Frame Properties cannot be changed.

A second example is CAD data. Adding .DXF, .DWG, or .DGN to this list renders files with these extensions invisible to ArcGIS. They do not list in ArcCatalog, cannot be selected for use in the tools in ArcToolbox, and are not available for drawing in ArcMap.

Solution or Workaround

Do not add any file type to this area in ArcCatalog, if a file with that extension already lists in the ArcCatalog Table of Contents. If a new file type has been added to ArcCatalog > Customize > ArcCatalog Options > File Types tab, remove the file type, close ArcCatalog, and re-open it. That file type is once again displayed in ArcCatalog.

For a partial list of the recognized file types, refer to ArcCatalog > Customize > ArcCatalog Options, and the General and Raster tabs.

Note:
At 9.2 and 9.3, a warning message is returned if the file type is already in use in ArcGIS Desktop:
================
Extension in Use

"<FILE_EXTENSION>" is a file type used by some Catalog items. If you add
this file type, some Catalog items may not work properly.
Are you sure you want to continue?
================

If this error message appears, cancel from adding the new file type.