The reason you are getting a gouge is because the moulding toolpaths you have created are using the 2 straight vectors on the left and right sides of the board as the vectors for the toolpath. Since a moulding toolpath applies the last vector you select as the profile vector, this means it thinks you want to cut a vertical line 118" deep on one of the side vectors. As explained above (and in the videos), you need to select a rail vector and a profile vector at the same time. The last vector you select will be the profile vector. In version 9 you can select more than 2 vectors. All of the vectors except the last one will be treated as rail vectors and the last one in the selection will be the profile vectors, which will be applied to each of the rail vectors. In version 8.5 you could only select 2 vectors, 1 rail and 1 profile. Not sure where you got off track, but this is a function I use day in and day out and it is pretty straightforward.
EDIT - just to be clearer, when you select your vectors, first click on the rail vector. Then, while holding down the Shift key, click on the profile vector so that both are selected, and the profile vector was selected last.
D&S Artistic Woodworking http://www.dsartisticwood.com