Sorry about that oversight Chad. When working in XM you don't have the same delivered geographic tools and Bentley map is not available for this type of conversion. The best suggestion I have is to upgrade your programs to the V8i platform where you have the geographic tools to run the above process because Bentley Map is included free with the InRoads installation of the V8i SS2 product. Otherwise, your data from LIDAR is larger than the survey tools are designed to contain in the fieldbook.
To answer your question about importing the text file containing the coordinates, one thing to keep in mind is InRoads is unitless. When we bring in the information, we are bringing in the coordinate as surveyed and stored without any sort of unit or even a defined geographic coordinate system, so the geographic coordinate system set in MicroStation will determine the coordinate system the data is displayed in. Then if you perform the process outlined in the initial response you are importing into the survey coordinate system, then referencing that into the correct coordinate system by opening a new DGN with the correct defined coordinate system to display the graphics projected onto that system.