The layouts was imported from 1.7.9 version where we were able to put embedded files on the layout.
Actually the layouts was created on 1.7.6 and then update the CMS to 1.7.9.
If embedded files is not an option that means that they should assigned directly to the display.
In my 1.7.9 CMS, Generic File isn’t assignable either, so I think someone has modified that in your CMS.
You’re correct that Generic Files should always be assigned to the display or display group. They aren’t intended to be attached to a layout like that.
The generic file module wasn’t ever an “assignable” module, meaning they could exist in the library but never be assigned directly to the Layout.
The module itself doesn’t contain any information for how one of those files should be shown - its impossible for us to know as they could be any type of file.