In this case, the question was “why doesn’t layeredTexture work in Arnold 5?”
This is a common question/problem with Arnold 5: shaders plugged into color slots.
In Arnold 5, shaders like Standard Surface (and Lambert too) don’t return colors. So in general, you can’t plug them into color parameters. And Blinns are translated into Standard Shaders by MtoA, so you can’t plug a Blinn into a color either.
Instead of a layeredTexture, you can use a layeredShader. It knows how to handle shaders that don’t return colors. Or you could use the Arnold aiMix shader.
So, if these shaders don’t return colors, what do they return?
Closures. They return closures.
A closure is not a color, it’s a bundle of data that tells Arnold how the surface (or volume) scatters light. Arnold takes care of all the ray tracing and light sampling, and then uses the closure to figure out the surface color.
From Master Zap:
“The addition of “closures” is a complete godsend. This relegates the work of rendering to the renderer, as it should be. No longer are material shaders little dumb raytracers that count lights and shoot reflection rays. A material shader returns mix of BxDF closures, and the renderer itself takes care of doing “the right thing” with them”.
From the Arnold 5 release notes:
Closures: a new closure parameter type has been added, which shaders can output instead of final colors. There are BSDF, BSSRDF, emission, matte, transparency and volume closures. See the API documentation and examples for more details on how to use these. Linking a color to a closure parameter will automatically create an emission closure with that color. A closure parameter however can’t be linked or converted to a color, as the integrator only computes lighting after shader evaluation.