My parents flew through Delhi recently. They did not have any problems. The layover is a drag, if it is a long one, try getting a hotel. I understand there are travel assitance booths from where you can make reservations for local hotels. Quite easy. And yes, you have to take your luggage out if you go out through the immigration. Not sure if you stay within the transit lounge. But, a word of advice, if I may. Do NOT fly Air India. They SUCK big time. The inflight service might be ok, but the ground staff at the airport, city office, call center, online site... they all SUCK. Instead, spend one or two hundred dollars more and fly some other more professiona airline.