I had this issue also. Was using ArcMap 10.4.1 and the .dwg was saved as a 2010 AutoCAD document. I fixed the issue by saving the .dwg to 2007 format instead. I hope this helps someone else in the future.
Good morning,
We have followed the 'save back' solution that was presented. On further discussion with ESRI, they sent us some 'Good CAD Characteristics' (attached to this message) which are necessary for implementing ARCMap Indoors...in case that is the path you are headed.
It's not the heaviest of lifts, but the characteristics might stray from your entities CAD standards. We'll be revamping ours to dovetail into the Indoors product.
Hope this information helps as a supplement to the problem in the subject line.
Cheers,
Richard