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I moved a file from photoshop to illustrator and when I click on a layer and choose a color it does not show and sticks with the orginial color. As you can see in this screenshor, a layer is selected and on the far bottom left you could I have selected a different color than what is actually shown on this layer. What could be the problem?
Try to change the colour using the Appereance palette.
If not double click on the text to expand it and then try changing the colour that way.
If the Photoshop file you moved is a raster file then you will not be able to actually edit the color directly. To verify this see what happens if you go from the Preview mode to the Outline mode (View>Outline). If you only see an empty rectangle where your imported Photoshop is then you will not be able to edit its colors directly in Illustrator.
Thank you! yes it turned to an empty rectangle. Any idea how I could fix that and be able to edit?
You can try using Illustrator's Image Trace to make the raster image vector. See: https://helpx.adobe.com/illustrator/using/image-trace.html. WARNING though this feature is very far from perfect and you may very well not be able to create a satisfying tracing. Otherwise you will have to find out if this file exists as a vector Illustrator file (assuming it's something that you got from an outside source).
it is not an outside source. I first created it in illustrator then moved it to photoshop then illustrator. Not sure where I went wrong but thank you for your help. I will try going back to the orginial illustrator file.