Explode XREF/Insert an XREF Into Drawing
Open the External Reference Manager (you can use the XR command)
In the External References window that pops up, right click on the external reference you wish to insert into your drawing and select Bind…
In the Bind Xrefs/DGN underlays popup window, select Insert under Bind Type, and then click OK.
This creates a Block Reference of your XREF inside the drawing, which you can now explode.