Kevin I had the same problem with an RDG Dixon tool holder when I had my ML7.
When you speak to RDG they will almost certainly tell you that the toolholder will only accept a shank of about 6mm! (I may be a mm or so out after all it was a few years ago). This is fine but a heavier shank will give you more tool rigidity.
If you check their website you will find that they do now offer a 10mm tool with a section milled out to allow it to fit into the toolholder and drop the tip to the level you require.
I now have a Myford 254S, and that came from Myford with a genuine Myford Dixon Toolholder, and that is a much more versatile piece of kit and allows full use of 10mm and 12mm tools.
I believe that they also offer a “genuine” Myford toolholder now so perhaps, if you explain the situation fully, they may do an exchange.