Selecting a World File through the Transformations Tab for CAD data, which was reinstalled wtih 9.2 Service Pack 2 in ArcMap, crashes the application with "ArcMap has encountered a problem and needs to close. We are sorry for the inconvenience."
You can still successfully use the world file in the Link Table button on the Georeferencing toolbar, as long as Georeferencing > Update Georeferencing has not overwritten the coordinates in the world file NIM007417.