Trying not to get into real-world physics, I generally rule that illusions (including invisibility) can hide the source of light, but not the illumination it provides. Thus, if someone is standing within 20' of a torch, but on the other side of an illusionary wall from the torch, he would be in full illumination, but not be able to see through the wall or tell where the light was coming from (unless he makes a save). This has always worked well for me in game, even though it makes no sense from physics standpoint.