Hi there,
It sounds like there may be a bug in the KML export from ArcGIS.
There are some 3rd party tools (such as Arc2Earth) that have
alternative methods for exporting KML from ArcGIS, but I have no idea
if they support exactly what you are trying to accomplish.
If you want to post a link to your KML and a more detailed description
of what you want it to contain someone here may be able to provide
advice on how to fix the KML. Alternatively you may wish to post this
over on the ArcGIS forums to see what is wrong with their KML export.
Cheers,
-Josh