Hi PaQ,

That is a strange one. Messing around with your model and found some interesting results.
From a fillet size 0.1 to 0.5 same as your result, 0.6 failed so I thought thats the limit, typed in
0.7 works again with the same result, up to 0.8 then at 0.9 it's happy and a nice looking fillet up to
about 1.4 then fails.

Tip: When doing a fillet and it fails, change the shape option to G1 blend, sometimes it works, anyway it did in this case.

.