This is a known limitation with the SolveSpace NURBS backend. There are no plans to improve the backend for now. Check the "Force NURBS surfaces to triangle mesh" option in the group properties every time this issue arises, as a workaround.

Generally, you can achieve some success with getting the NURBS operation to proceed by making sure the NURBS surfaces do not coincide with each other (the torus is constructed from 4*4 surfaces, a circle being constructed from four rational Bezier curves). I.e. in this case, try making your torus's center slighly off the edge of the rectangle. This is, of course, inconvenient to do.

@whitequark would you please label this 'NURBS' so I can find it easier some day in the future.

done! feel free to send me any other issues to tag, I appreciate this

This is actually fixed now.

Fixed on 2020-10-09 22:10:22 in commit d72eba8
Pull request #733

I am adding this comment just so that things are cross-referenced.

This is the oldest "NURBS" issue on GitHub and now it is fixed - thanks @phkahler :-)
@whitequark I hope you'll enjoy this :-)