SummaryOne of the rules when using ""FilletEdge" is exactly 3 surfaces must meet at a point. In this example, there are four surfaces to deal with.

Overlapping boxes

Original overlapped boxes.

Use FilletEdge, radius .25, to get most of the work done.

Extract the four fillet surfaces from one corner and untrim one crossing pair.

Use FilletSrf with a radius of 0.25, to create a fillet between the untrimmed pair.

Trim and delete the extra surface pieces.

Join into a closed polysurface.