I suppose it can't hurt to reload the software. I've never heard of it becoming corrupted in this way, but who knows?
I tried to recreate your problem this afternoon and didn't come up with anything that looked like it. To ask a few more questions, does this show up if you do the following and NO MORE:
Create a new file at a reasonable size (say 10" x 10") at standard resolution on the setup page. Doesn't matter if you set zero on top or bottom.
Pull in the dish or create it, either way.
Pull in the alligator and position it in the dish. Don't bother with a zero plane for this.
Set the combine modes of both to "Add"
Create a vector just around the dish
Set the model to the top of the block in the Material Setup dialog under the Toolpath tab
Create a 3d finishing toolpath with a 1/8" ballnose using the vector as the machining limit boundary
What does it look like?
D&S Artistic Woodworking http://www.dsartisticwood.com