Re: Weird behavior and crashes...
I loaded your tool and recalculated the toolpath using your exact settings and it worked well. I took a look at the mesh properties and it was set at the default "Jagged and faster". As Sven mentioned, you need to be conscious of your mesh settings when working in madCAM. There is a couple of ways you can do this. The least efficient way is to memorize the settings and change them every time. I wouldn't do it that way. You can set the properties and then save a template that you use every time you use madCAM. I don't do it that way, because I've got way too many templates already. What I did was add another button to the madCAM toolbar, right at the beginning, that sets the mesh settings and also creates some layer organization. That button runs a simple Rhinoscript (soon to be converted to Python) that takes care of this. So all I do when I need to make some cutter paths is to pick that button first, then activate my part. If you're interested, I can share that script.
Back to your problem. In this case, setting the tolerances correctly wasn't a factor in cleaning up the toolpath. Honestly, I'm not sure what is the cause. What are your system specs? Maybe we should start there. Are you running the latest madCAM in Win7 64-bit? Are you using Rhino 5 64-bit or 32-bit? Is your Rhino at SR8?
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(Note: The opinions expressed in this post are my own and are not necessarily those of CNCzone and its management)