One easy solution is to convert your surface body into a solid body and then fillet as you would normally.
Alternatively, just knit Surface-Knit-1 to Boundary-Surface8 and then the fillet tool should work normally.
the problem originates back with your base boundary surface2. You are creating a de-generate vertices because your 1st and 2nd direction curves converge.
This is a classic mistake that users make when creating boundaries and lofts. This will not just have implications on not being able to fillet but you probably will not be able to shell this shape - which I suspect you'll want to do eventually. Also, your mid-plane (mirror) 1st direction curves end conditions are set to "None" which makes your left and right halves non-tangent. You'll want to make them Normal-to-profile like shown below:
Next rollback into boundary surface and first convert curve to 3D sketch> offset entity. Now create 2 3D sketch curves that will cap the ends like shown below making there ends normal to the X vector.
Now with two additional curves, add them to your boundary and then most importantly click on the option in the boundary to "Trim by direction 2":
This will exclude the ends of the boundary from being built.
Now create some simple extruded surfaces that will be used for the (tangent) fill surfaces in these areas at either ends:
Once you have these you can now create a Fill surface feature and make sure to make all boundaries tangent and turn off "Optimize Surface" option Optimize tries to create a coons patch surface and is to be used for only 2 and 4 directional boundaries.)
Fill is a special surface feature in SW that is to be used when you have 3 or 5> sided boundary patches to create. It does not derive it's tangent normal from the surrounding surfaces like boundary or loft. Rather it averages the isoparms direction so that you can avoid a degenerate point.
Now you can proceed to the end of your model - make it solid and use a face to face fillet using the Choral Width option:
Modified model is attached.
Awesome, thank you Mark and the others for your replies.