Hi NightCabbage, thanks for posting the file.

It looks like you have things lined up properly, so that was not the problem.

The problem is just that the scaling rail mechanism is not suited for this kind of situation where there is a kind of "cliff" in the scaling rail. See this previous post for some more explanation:
http://moi3d.com/forum/index.php?webtag=MOI&msg=1807.7

Instead of using a scaling rail, use Revolve instead for this kind of a thing.

The scaling rail is more for adjusting things to control how a shape bulges as it travels along a rail, it doesn't really work well for collapsing down to a squished down point like you've got here.

- Michael