Arrangement of layers doesn't correspond to screen image

I’m having trouble arranging my anim layers correctly. Dragging the layers in the timeline seems buggy as the layers don’t always stay where I place them. Adding insult to injury, the arrangement of the layers in the timeline doesn’t correspond to the image on the screen. My BG layer is in the right place on screen, but appears three layers from the bottom in the timeline. There is communication problem someplace. This should be pretty straight forward. I have a BG, an UL, four char layers, an effects layer and an OL. Thoughts?

Thanks.