Don Bentz wrote about an often overlooked feature of the LAYFRZ command, which is the Settings/Undo option. Don says he has seen people try to freeze a layer in an xref and have the xref layer freeze instead, not realizing the setting is set to NONE and not the ENTITY or BLOCK level (or even realizing the setting exists).
 
"When the command is begun, the current settings are displayed on the command line. These will remain the default until you change them. You can choose to freeze (or VPfreeze) the entity, change the settings, or undo.  Press (S) for settings.  Users then choose which setting type to alter, Viewports or Blocks, B for blocks (which also handles Xrefs.)  The Block Nesting Level options are  either block level (B), entity level (E), or none (N). By choosing E for entity, this will freeze the layers of entities nested within a block or xref.

"The Layoff command works in a similar fashion and also has the VPfreeze option."

NOTES FROM CADALYST TIP PATROL: Good point.  There are many commands that we use often that have many more settings that could help us but we aren’t aware of them.  Remember to read the command line to find these hidden gems.  The Out of the Box settings for the LAYFRZ nested level is set to BLOCK.  That means if a selected object is nested in a block/xref, it freezes the layer of that block/xref.  The other two settings and their functions are ENTITY -- Freezes the layers of selected objects even if they are nested in an xref or a block, and NONE -- If a block or an xref is selected, freezes the layer containing that block or xref.