Final answer:
The incorrect statement for a Layer File is that it always contains actual data within it. Layer Files save visualization properties and may reference data sources like a Shapefile or Feature Class, but do not hold the data themselves.
Step-by-step explanation:
The statement that is NOT true for a Layer File is c) Always contains actual data within it. Layer Files in GIS software, such as those created by ESRI's ArcMap or ArcGIS Pro, are used to store the visualization properties of data, which includes symbology, and other display information. However, Layer Files do not contain the actual geographic data. Instead, they include a reference to where the actual data is stored, such as in a Shapefile or Feature Class. A Layer File does preserve symbology (the visual appearance of the data), and it can also store a current selection set, which are the features selected within the data when saved. But the actual geospatial data is stored separately in the data source to which the Layer File is connected.