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There seem to be multiple posts over the past years about issues with Libraries. I have been really frustrated trying to use them and have pretty much given up. But, making this post in HOPES that Adobe will do something to fix these issues.
I really hope Adobe addresses these things, because items 1 and 2 make this Libraries feature pretty much unusable for me. It has functioned like this since this feature was introduced and has not been fixed. Even after brand new installs of the software and brand new Macs. There is no reason why a native Illustrator graphic placed into the cloud should be put into a clipping mask when it's dragged back into the software that created it. I am assuming it's because it's being converted into a PDF when it's placed in the Library, but it's completely ridiculous.
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So, after digging around more, I finally found a solution to #1. I had to switch the Library panel display option, because that is not synced, and had to switch it to sort by Custom Group. The named groups now display properly.
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Really annoying that 2 has not been addressed. It drives me crazy!!!
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If they haven't fixed it by now, they will not ever. I can only assume that by dragging the Illustrator art into the library it is automatically being converted into a PDF and so you are dragging a PDF back into Illustrator instead of the actual Illustrator file. Not sure why they would ever program something like this. Completely ridiculous and a waste of time. I might as well just keep all the Illustrator files I need on my computer and open them directly to get the art that I need. The Library is useless to me.