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AutoCAD 2007 cannot read MLI files directly, but it can convert the materials that exist in a DWG file. I'd suggest this workaround. Using 2006, run RMAT and import all the materials from the library. Save the DWG. In 2007, add the Texture Map Paths to point to the texturemaps you have, then open the DWG file. Run CONVERTOLDMATERIALS and your materials will be converted. Now drag and drop them from the Materials Editor into tool palettes.