Convert LIDAR data

Extract XYZ should work but does not provide the filtering and thinning that you desire.  You would end up with all umpteen gajillion points, when what you really want to do is thin the number of points to a managable size. 

My experience with the LIDAR tools are limited so there might be a better way, but here is what I would do: 

1. Make a copy of your LIDAR file
2. Open the copy in a text edotor that has ability to work column-wise, such as UltraEdit, which I use.
3. In column-wise mode I am able to highlight columns of data instead of lines and delete the extra columns of data. 
4. Now use the copy sans the extra columns in the LIDAR tools.

I tried those tools on a different data set and was not able to make it work. I'll look at them again when I get a chance but for now I have put out a call for a revised dataset from the provider. Meanwhile Mike Barkasi offered to edit the file for me so it will be interesting to see what he can do.

Have you tried using the 'Extract XYZ' Tool (From the DTM Toolbar)?  This is a bit slower than the 'DTM LiDAR Routines' but allows you to specifiy the columns in your XYZ file.

 Hope this helps. :)

Cheers Ian