I don’t know if this is the cause, but I think your Flute Length may be incorrect. I’m guessing that you are supposed to use the vertical height of the flute rather than the angled length, so the flute length would be more like 3/16" (.188") in your case. However, I’m not sure why this would have an impact on the V-carve shape.
EDIT: I played around with this some more, and I think the issue has to do with the diameter of the Vee cutter you set up. The 0.5" one in the C3D library has a diameter large enough to be able to cut across both vectors in your letters, whereas the 3/8" cutter you set up does not. If you change yours to 0.5" diameter, the simulation will probably look the way you want it. So I think you will need to use a larger diameter Vee cutter (if you have one) or offset the lines in the letters and do a combination of Vee cuts and pockets to carve them. I could be wrong, but I’m sure @WillAdams will set you straight if I am.
In any case I suggest you download the latest version of CC (Build 449). The method for adding custom tools has changed, and they now use the more standard included angle rather than angle (per side), so your 90° Whiteside bit would be entered as 90° instead of 45°. Flute length is not even used in the standard form for the new version of CC.