You have to go into setup for each part and set part accuracy to absolute. Alternatively add config option to enable absolute accuracy.
Absolute accuracy equates to the length of the smallest edge in your model and has length units. Relative accuracy is the ratio of the smallest edge in your model to the length of the diagonal of the model bounding boxand is dimensionless.
For merging/cutout to be successful each part absolute accuracy must match. Setting this is a balancing act as dialing it up or down can fail features, so change it a little at a time.
Beats me why PTC still uses relative accuracy. As this this is held constant by default, absolute accuracy is permited to float. I always set accuracy to absolute so as to avoid merge/cutout failures.