I want to combine different layers into one but I still want to identify different layers in the new combined layer. Union is best for this, but it doesn't allow me to combine more than two layers. I am using arcgis 10.1, with site license.
You say that you are using a "site license" but not whether your license level of ArcGIS for Desktop is Basic, Standard or Advanced.
If it is Advanced then Union will allow you to use more than two input feature classes.
If it is Basic or Standard then you will need to do pair-wise Unions and then Union the results instead.
To have the original FID for all feature classes preserved in the final output you should use ALL for join_attributes.