Are QII7.1 Symbol files mandatory ?

As is a problem with schematics, I don't follow what you're describing. You have a lower level schematic(with Input/Output ports), have created a symbol(hopefully letting Quartus do that for you), and have placed it up a level and are hooking up the ports in the symbol? Naturally, that should work fine, so it sounds like something is being done that hasn't been captured by the description(or that I'm not following). A picture being worth a thousand words, can you attach a project showing this? I assume you don't want others to see your final project, so maybe just a quick dummy design?