Can I have two instances of a component on different layers? I.e. I have a component on level 1, then I copied it onto layer 2. When I hide level 1, both hide. When I drill all the way down to edit the component, it selects both components to edit and thus assigns both components to the same layer. Is there a way around this besides from making each component unique?
Yes.
No.
Did you assign the compoents to the layers or the geometry in them?
Both. It did allow me to assign the components overall to a different layer, but not the geometry inside them. But this defeats the purpose because if I hide the layer, it hides them both. So what should I be doing?
Can you upload the model?
You have committed the very common novice mistake of putting primitive geometry (faces and edges) onto a different layer than layer0 (in fact you have a different layer active in your model, which you should never do). What you are experiencing is exactly the reason that all the experts tell you not to do this. Draw all primitives on layer0 and only associate ComponentInstances or Groups to other layers. To fix it, open your components for edit and reassociate all the edges and faces back to layer0 (there are various plugins, including mine, that will do this for you but you can do it manually without much effort).
Ah thanks. I read the info about layer 0 in the help section about layers but didn’t understand exactly what it meant. Now it works. Thanks.
You can use TIGs helper plugin to make sure this doesn’t happen again 
It happened again… All primitive geometry is on level 0, with level 0 selected. But whenever I select one component and try to change its layer, it selects and changes both. What did I do wrong now? Thanks.
The top-level components are on Active and Inactive layers, but their nested contents (hinge Component and unnamed Group) are all on the Inactive layer. So when you hide that layer everything disappears. The outermost container only overrides the visibility of the things nested inside it to make them hidden, not to make them visible.
Got it, thanks. I thought I fixed it, but the unnamed group was still in the wrong layer like you said. Using outliner to identify each section helped.
its a good idea to purge your example before loading, the example is only 115 KB, the other 2.7 MB is the hidden components and materials not required but interesting anyway
window-model info - statistics …purge button
Does that mean you can see all the things that I had previously deleted? How do you see them?
All raw geometry, groups and component instances are deleted. but…
All component definitions are retained in the file and can be accessed via the component browser in the home tab. This has its advantages … say for a template.
All loaded materials are also retained.
It is a similar concept to AutoCAD blocks and linetypes