CAD tip # 4581:

In older AutoCAD versions, these variables were used only for the block inserts/drags from DesignCenter. AutoCAD 2006 (and higher) uses them for all methods of insertion of blocks, xrefs and images.

If your blocks are inserted in an improper scale (e.g. scaling 0.254, 12, 10 or 1000), you have probably wrong (different) settings of your block insertion units. Set INSUNITS e.g. to 0 (unitless) - then both the INSUNITSDEFxxxx variables will apply - set them also to 0. Also make sure you are using the same measurement system (imperial/metric) in both drawings (the MEASUREMENT variable).