If by “cutting diagonal” you mean “such that the bit is digging into the grain” (i.e. two of the eight sides of an octagon, not four) then either (1) you aren’t cutting deep enough for that compression bit, or (2) you need to use a left-spinning bit to cut those particular edges. Or, I suppose, (3) use a down-cutting bit for the first pass. Or, (4), if you’re going to chamfer the edges, chamfer them first.
In the (1) case, you need to cut deep enough so that the top layer of the plywood is being cut by the down-spiral part of the bit. See https://www.youtube.com/watch?v=NfBxIMkRLEc