I've noticed at times that if you break apart everything and rejoin, a fillet will then work - not sure why, perhaps it just internally reorganizes stuff which makes it work better.

There's a bunch of tips around here (hopefully collected somewhere?) about fillets - even how to get variable width fillets etc. Finding this info may be helpful (I need to collect up this info also!) Perhaps someone has a link to all the fillet tips and info...

-Will