When set to [Truncate: First] the construct circular fillet command will not accept the second element if it is a reference file even though it does not need to be modified. If set to [Truncate: None] will place the fillet however the first element must then be manual modified.
Yes, I agreed with Andrew. I have also tested in various version, as far as in MS/J. Elements that appeared in references can be performed using "Construct Circular Fillet tool with Truncate (None). and here, the first element must then be manual modified . Work as designed.