From the LAT:

All of the Sept. 11 hijackers broke U.S. immigration laws and some of those violations could have led to their detection and arrest, according to a new staff report from the bipartisan commission that investigated the attacks.

The detectable violations included fraudulent passports presented by as many as seven of the 19 hijackers, the report said. Also, U.S. intelligence had linked at least three of the hijackers to terrorist groups, but officials never placed their names on the watch lists used by border inspectors.

Moreover, the report said, ringleader Mohamed Atta was allowed back into the United States in January 2001, even though he had previously overstayed a tourist visa and was not eligible for admission...

See also the AP's "9/11 staff report focuses on immigration".

The report is available here. A brief look at 'Chapter 4: Immigration and Border Security Evolve, 1993 to 2001' reveals the following discussion of "immigrant advocacy" groups and sanctuary laws:

Friction also existed in these relationships. It mainly arose from the INS's inability to respond to all requests for assistance, ambiguity regarding the role of state and local law officers in enforcing immigration regulations, and the discomfort many various immigrant advocacy groups had with local enforcement of immigration law. Despite these difficulties, many police officers continued officially and sometimes unofficially to work with the INS by identifying criminal aliens and turning them over to the INS. Many county officials sought to prevent criminal aliens from returning to the streets, and frequently pressured their congressional representatives to force local INS offices to deport them.

...In 1996, a new law enabled the INS to enter into agreements with state and local law enforcement agencies through which the INS would provide training and the local agencies would exercise immigration enforcement authority. [281] Terrorist watchlists would not be made available to them. Such agreements were voluntary, and only Salt Lake City unsuccessfully attempted to take advantage of the law. Moreover, in prior years mayors of cities with large immigrant populations sometimes imposed limits on city employee cooperation with federal immigration agents. [282]

Footnote 282: This "sanctuary" policy was first published by Mayor Edward Koch on August 7, 1989, and directed city "line workers" who had contact with the public to not transmit information respecting any alien to federal immigration authorities. However, it exempted the police and the Department of Corrections and directed them to continue to work with federal authorities "in investigating and apprehending aliens suspected of criminal activity." Koch, executive order, Aug. 7, 1989.

See this for more information on L.A.'s Special Order 40. The previous post "License Crackdown Stirs Sharp Debate at Hearing" has more information about the 9/11 hijacker's use of driver's licenses.