Hi cx, in case you don't have an earlier version of the model available, I separated out the parts in the attached 3DM file into their pre-boolean state.

If you fillet the edge of the cylinder first like this:



And then do the boolean cut for the making the notch afterwards like this:



Then that should give the result you want:



There's definitely a bug though that was preventing it from working correctly doing the fillet after the boolean in this particular case.

- Michael