I have no problem with this workflow. The text remains editable for me. Make sure you have the top radio button checked in the Import dialog.
Hi Larry, thanks for the reply.
Maybe the issue is that I am not importing but opening the file. I use File, Open and select the photoshop file from there. According to this article in Layers http://www.layersmagazine.com/photoshop-layers-illustrator.html what I am trying to do isn't possible. I can bring them in I just can't modify them. And just to reiderate, this is a file created in Photoshop to be imported into Illustrator.
Am I missing an "Import" option somewhere in Illustrator to use in place of the File Open?
That's what I was doing. Opening the file in AI. The text is on its own layer and fully editable. I can even copy the paste into a new AI file and the text is still editable. One thing, in the Photoshop file make the text the top layer so it is not modified by any PS effects and see if this helps.
This is not quite true, although the screen shots show a tiff I opened it works the same way with a .psd file. If you have an effect applied to the text it will not be editable but if you do not have an effect then it will be editable as you can see below. You will be able to scale and rotate the text that has an effect applied.
Editable (No Effect)
The solution is to apply the effect in Illustrator if possible or link the file by placing it and editing the text in Photoshop
where you can use the Photoshop layer effects.