In your case I would use a circle mill unit and describe a chamfer on the hole. Then just erase the endmill out of the unit. This will make the cutter just plunge down to make the cut. You may also want to check the ID minumum in the chamfer cutter section of the tool file. If you really need to interpolate the hole you will have to change some parameters ("E's" look in the parameter book) for the wall over lap and minumum approach point clearances radial and axial. With the factory settings the cutter needs a lot of room to ramp in and out. When interpolating set your Z clearance as little as possible and your R clearance large this will force the cutter to use the tip not the OD of the cutter. Somethimes chamfering in tight places can be a little tricky you will just have to experiment.