Klickoff, I was able to re-Blend that area and got this smooth result. (shown)

The broad line you made at the bottom needs to be Extruded and made into a planar or curved surface, as long as it kind of follows the general curvature or at the least the direction of the surface you want.
I performed a Blend by selecting the actual curves on the edges of the surfaces. (shown highlighted)
The Blend made the surface by following the tangent from the surface edges.

However, I needed to Blend from the whole length of the edge at the top.

Here:

I did a "Merge" command on the whole length to get one solid edge line by which to Blend from.
It's very smooth.

Are you able to try this?
Let me know, so I can see what's happening.



http://www.mediafire.com/?3x2zag0yqtd8pmz
Look at your file with the blend.