Deleting that round surface made these arc edges go away (still don't know edge of what these were). Similar thing for rectangles.

Now trying to create surface in place of deleted rectangles:

http://ixion.pld-linux.org/~arekm/blend-fail.avi
http://ixion.pld-linux.org/~arekm/blend-fail.3dm

Why fails and how to make surface there properly?

Actually I see no error and no result.

(noticed weird thing where error "Calculation failed" immediately disappears and I wasn't sure what is going on until noticed that text was actyually appearing but only for fraction of a second. Maybe this time it also is shown for a fraction of a second but didn't notice that on saved avi)