ok, here's what i did
both objects were in standard mode, clicked then both, then sub-d menu --> attach, bring up the menu, then i played a bit with the threshold, put it up at 0.0200 and applied it.

Then, you have to drag away your original models away from the combined model, if you checked to keep the original models, and everything looks fine then.

Hope this helps ya, had the same problem today, and with a bit of fiddling, i got it solved.

cheers