Looking at the stock from the front view will explain the height issue. You have the Embossing Stock set to Z=0.0 which puts the embossment in the positive Z, and the machining stock is set to accomodate that placement. Here are the steps to put it at the height you expect. (looks like a lot of text, but it's really just a few easy changes).
First, lower the Embossing Stock by the height of your highest embossment, (0.125"), plus just a little to make sure you're cutting all the way across. That will ensure that the model is fully within the stock. Right-click on [Emboss Model], then click <Create/Modify Stock> and type in a value for Z (-0.15" would work here).
Having done that, you'll want to modify your machining stock as well, so it simulates correctly. Go to the CAM tree, right-click [Milling Stock], and click <Stock Wizard>. you want the second page, so just click the [>>] button. On the second page, in the [Size] box, click the "Enter" button. That will light up the current dimensions. just change the value of Z from 0.125" to the thickness of the stock you plan to cut, say 0.75".
Now, in the [Stock Orientation] box, you'll want to change the Origin, to set the top of the stock to Z=0.0". First, click the "Enter Origin" button. The origin coordinates you've set will light up, and you can set Z to 0.0" With that done, you'll now want to go to your Slice Planar feature, right-click [Geometry], and re-Select your surface, then right-click [Slice Planar], and click <Compute Toolpath>, since the job has effectively dropped about 1/4".
Before cutting, make sure to have a look at the Simulation. First, because always looking at it will save you a lot of mishaps, and second, so you won't be disappointed with your cut. This will serve to check that the machine is working correctly, but a 0.25" flat endmill stepping over at 0.05 will be a very crude rendition of your model, and I want you to know that ahead of time, so you don't get mad. It's all good practice for when those shiny new endmills arrive, though.
Oh, you might want to increase the <Allowance> value in the [Slice Planar] feature. 0.02" is shaving it a bit close. Even a 1/16" ballnose will cut 0.03" of wood or plastic easily, and if the cut is too shallow, the stock can compress beneath the bit, rather than cutting cleanly.
Hope this helps!
Luke