Hi:let's use Martin's file:

select yellow loop and union



on top wiew draw two circles R=2



sweep:two circles as sections and yellow curve as rail



trim your solid using red sweep object



select both loop edges and blend using G2-bulge=1



to avoid wrinkled blend,select PLANAR SECTION option on the Blend window



you'll have a straight line instead of curved wrinkled seam



hope is smooth enough for you



say lot of thanks to Michael to make this fantastic software,not to me....


file attached: M