[Joel]

Quite likely Layer 1 has a large shape or rectangle taking up most of the canvas. When you're using the Line Tool, it's attempting to connect to that shape, and unless you draw the line to some place outside of the shape it won't draw, unless there are magnets on the rectangle to connect to.

If you need the shape to be there, then locking Layer 1 is the easiest method to get around this, another alternative would be to disallow connections to it in the Properties: Connections Inspector.

Hope this helps.