Stock 5" x 5" x 1 1/4"
Small circle tool path 1.25 Radius outside clockwise cut. Cutter 1/4" Ball. Depth 1/2"
Large circle tool path 2" Radius outside cut. Cutter 1/4" Flat Depth 1 1/4"
How do I remove the rest of the stock between the small circle and the large circle?
Do a pocketing patch which includes the small and the large circle.
It should go something like this:
two nested circles
first, pocket operation to establish desired thickness (optional, not needed if stock is correct thickness)
second, select both circles and do a pocketing operation down to the desired thickness of the handle
last do an outer profile to cut the part free
I would add a third circle, one for the hardware and do a pocketing operation on it first (it would have to be at least 10% larger than your endmill — no drill options in Carbide Create), then put a bolt down it into a threaded fastener on the wasteboard, then continue.