Another SMT Question "Foundation"

Another SMT Question "Foundation"

I'm working on a Die Wall with an unusual  Face. I have set my Plates and the Nailer Transition Top to reflect "Extrusion Apply Machining"(True) and the result is not what I thought it would be. The Dado for the two plates did not cut the dado for the Nailer Transition Top.

Is there something I missed in my 2D Geometry??

The RED circles show how SMT cuts it and the Blue circle is how it should be done.
Any insight is greatly appreciated

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