How do I draw a edge rabbet (rebate) in Easel?

I’m stumped… I’m trying to cut a 2" wide x 4" x .75" high rectangle. The top edge needs a .35"x.35" rebate cut across it.

I place a 2x4x.75 shape and set it cut outside. No problem there, Then I drop a 2"x.35" rectangle and align it with the top of the 2x4 shape. When I set the FILL DOC to .35". The top edge of the 2x4 outside cut changes to red. The simulate appears not to cut the top edge correctly.

What am I doing wrong?

Red says it can’t cut it out. Usally the bit is too large.

The bit CAN’T be too large. It’s an outside cut on the perimeter of a rectangle.

I just tossed on a piece of MDF and did a test carve. Even though the top and sides of the rabbet displayed red, it actually carved OK.Just ignore the red. There was a bit of a rounded corner on the bottom left and right of the rabbet. Nothing a sharp chisel couldn’t quickly cure