Your illustrator elements must be on a different layer, not just a bunch of objects that are revealed when you spin down the >. If your layer palette looks like this and it still won't work then you may have to save the file as an earlier version.
Open up your file in Illustrator, then do a save as and pick Illustrator 8 or 7. I think that that will be about right. It's been a long time since 6.5. If it still doesn't work you've got other problems.
You are mistaking objects for layers. They are two totally different things. As Rick pointed out, they must be organized in AI to be on separate layers. AE 6.5 should accept any Illustrator files up to version CS without problems, assuming they have been saved down to the proper specs from AI CS3 and contain PDF data.
Thanks for the info. I had the orginator resave the document as AI CS and it imported into AE 6.5 with layers as I needed.