Ok, so one reason why blend goes crazy there is that the filleter did not do a good job of trimming the fillet piece back. If you zoom in very closely (using the Area zoom) on the bottom-left corner of that hole, you will see that the edge curve is a zig-zaggy mess which looks like this:
So that's not good! There are some cases like this where things come to a point at a shared tangent that are not handled very well, it is a difficult area of calculation.
However, the fillet surface itself is fine, it is just the trimming curves on it that are messed up. So here is how to salvage it - isolate just the fillet surface (separate the model and hide everything else). Now select the 4 edges of the fillet surface and hit delete - this will remove the trim curves from the surface and expose just the entire underlying surface.
Sometimes it is useful to get a kind of "preview peek" at the underlying surface without having to untrim by turning on control points, you can see the extent of the surface by its control point grid, and also if it looks clean or looks messy. Note that you have to have an isolated individual surface to turn on its control points.
Ok, now at this point you have this: (view from the back so the gap is clear)
The fillet has to be trimmed back now, and it has to be at the last place where it touches the upper surface. To do this, we will draw a line - here is a view from underneath - snap on to the intersection between the edge curves at the top, and then you will get a perp/perp snap for the bottom:
Now you can trim the fillet with that line. Since the line is not on the fillet, it will get sucked down on to the fillet surface by pushing the line towards the closest point of the surface, which will work fine for this case. Discard the portion to the left and you are left with this: (view back on the other side now)
This is now a cleaner hole to fill. One way to fill it is to join the surfaces together (which will also split up edges where things are touching), and then do a 2 rail sweep (use the short curves as the profiles, the longer curves as rails):
Ok, so there you go, simple huh! :) Just kidding - it seems like you happened to pick a fairly difficult model even though it seems initially like it should be easy. Things that disappear into sharp points like that tend to be a problem area for rounding/blending.
But actually this served as a good tutorial on what you can do when things go wrong though! So that part was good. :)
I think that a lot of your problems would have been avoided if the filleter would have trimmed the fillet piece off straight down from that intersection (like the line I drew above) instead of trying to sort of slice it at an angle. Maybe in the future I will be able to figure out some way to set it to do this so that it will give you a cleaner piece to deal with right off the bat there, that would have helped a lot in this case.
Please let me know if you need any additional clarification about any one of these steps.
- Michael