[Taylor]

The problem comes from Inventor trying to loft two points into one. Since the front of the object comes to a point at the top and the back contains two points at the top, Inventor's getting (as Bob Hays would say) an ice cream headache attempting to converge. The loft-cut method allows Inventor to go from one triangle to another, which makes it simpler for the software to figure out.
Another way to "solve" the problem is to add a horizontal component to the front face. Draw a line at the top corners and dimension it to about a thousandth of an inch. It's not actually perfect, but it looks right and allows Inventor to converge two points to two points.
Coincidentally, we didn't find this particular piece to be a problem with Inventor11 (not to be read as a "that-version-is-better-than-this-one" statement; I just found it curious).
Good job on figuring out the solution. It took myself and the other IED teacher a couple days to get that one.

While we're on the subject of IED, and this question is directed toward PLTW teachers, what are your thoughts on having the students complete the model train instead of the arbor press? I realize the arbor press gets into the content center and gearing, but most of the pieces are quite complex, particularly to make so near the beginning of the school year.