Are some of the layers set to non-printing?
Did you save the Illustrator file as PDF .ai or EPS .ai?
EPS versions of .ai files will not import layers, PDF versions will if you create it that way.
To enable this, go to Edit>Save As... to open the Illustrator Options dialog box and check "Create PDF Compatible" and save the .ai file.
Thanks so much for your responses. Although I don't complete understand what the issue was becasue I am no Illustrator expert I did find a solution. I found that there were multiple layers within a layer and also many of those layers had paths/compound paths. So I pulled the layers within out and made new separate layers for them all and removed unnecessary compound paths. So now I have many layers instead of a couple layers with multiple layers within. Confusing I know...but it worked!
Thanks again for your input.