Hey Gerry, this is a bug that was also reported recently and will be fixed in v1.32a, which will be out this week. The image is divided up into cells that are equal to the tool's radius but have a fixed buffer size for storing individual lists of contour segments. With a small project size and a relatively large tool, complex images like this are divided into too few cells and throw a curve ball! For now you can increase your "path simplify" higher. I tested 0.35 and it works but the path isn't super smooth: 0.3 might work too. You'll also need to set your v-bit diameter smaller for small projects: the resulting toolpath will be the same so long as none of the features are wider/deeper than the specified tool. I tested it with 0.25" diameter v-bit, for a 4-inch wide project and it worked:
...or you can just wait until v1.32a this weekend and not have to worry about fiddling around with getting it to work. Have a good week!