If I've understood you correctly you have a layer that you have done some calculations on and you want to merge this layer with a second layer into a third "in memory" layer and then display this third layer?You should be able to do this with an in_memory workspace. When you use the merge tool the output is a FEATURECLASS this is not a FEATURE DATASET which is a sort of "folder" in a geodatabase. As you noted an in_memory workspace cannot support a FEATURE DATASET but it will hold a FEATURECLASS. From this you can write code to create a FeatureLayer and render as you wish then add that to the Map Document (IMap).Duncan