Place a checkmark next to the Invert Filter option at the bottom of the Layer Manager and pick the Settings… button.
Open the Layer Manager and in the left Filters pane expand the All filter, then select the filter named Xref. You can make your layer dropdown box display only layers that exist in the host drawing. When working with drawings with a lot of xref layers, the host drawing layer you desire to use may be difficult to locate in the layer dropdown box. At the “ Specify clipping boundary or select invert option:”, choose your desired method of specifying the boundary. At the “ Specify clipping boundary or select invert option:” prompt, type “ I” for the Invert option. At the “ Enter clipping option:” prompt, select New. Highlight the desired xref to clip, right-click, and select Clip Xref from the context menu. Many times it is desirable to make a blank area or hole inside the displayed xref, and you can use the clip command to do this. This article utilizes AutoCAD Architecture 2013, but some of the tips apply to generic AutoCAD as well and work the same in previous releases of AutoCAD Architecture. There are many aspects of good utilization of xrefs, but I thought I would list a few tips in this article.
I consider xrefs a critical and key feature of AutoCAD in the AEC industry and encourage you to look into them if you are not currently utilizing them on your projects. External References (xrefs) are an important part of working with AutoCAD and its vertical packages.