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I've had issues with edges that don't end on orthogonal surfaces. In other words, it's not a cube.
An alternative would be to insert a round ahead of your sheet metal conversion on the edge you want to rip using a radius that's equal to the sheet metal thickness and then use a surface rip to remove the round surface.
Thanx Doug for the tip. Apparently WF3 doesn't like it what you don't add a round to the outside of the part before you convert it to sheet metal. That's probably ok since it's not really a correct representation of the part anyway. Apparently it works ok in WF5 though...