Hardening O1 Tool Steel - What Am I Doing Wrong?

There will be some decarb layer just about no matter what you do short of a complete vacuum treatment. Are you seeing your file bite into that softer layer? Have you ground back past that, and file tested the ground area? I admit not having followed this thread all the way to see everything you have done.

But you're right, ultimately it's whether the tool works as you need it to that determines acceptability.
 
You know, I did grind the tool but didn't try to file it after that. I'm gonna give it a shot and see.
 
If it's Stubs steel or Barworth Flockton then it's good quality G.F.S. ( also known as gauge plate). Did you have enough volume of oil to properly quench the tool ? The quenching media should be plenty deep enough to completely cover the tool and shouldn't be boiling after quenching. Stirring in the classical "figure of 8" during quenching minimises distortion and gives a more even quench. The test with a magnet will only check that the surface is austenitic and not check all the way to the core. My guess is that you did not allow to soak long enough in the furnace.
 
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