Summary: The radii used in FilletEdge can not be so large that they overlap each other and completely consume any surface they are following. This tutorials shows what to do when the surfaces overlap.

Download Rhino 3DM file

Original polysurface. The red arrows idicate the two edges to be filleted. They are close enough together that the surfaces to be created will overlap.

Use FilletEdge to fillet the two edges with a 5mm radius. Notice how the surfaces partially overlap. Additionally, one of the other surfaces was lost in the FilletEdge process.

Zoom in on the two new overlapping fillet surfaces and use Extract them from the polysurface.

Zoom in closer to see the overlapping corners of the fillet surfaces.

Use the Intersect command to see the intersection curve shared by the two surfaces.

Using the intersection curve, Trim away the small surface corners that extend beyond the curve..

Join the surfaces to the polysurface. Use Cap to replace the missing surface. Finished polysurface.