I subdivided the object that i wanted to subtract (In your case the "drillbit") and then applied the Boolean to my main object. This worked just fine and I have nice and smooth edges where I "cut" into it. I hope I didn't just repeat the prior answers and could maybe even help someone. ;)

My order of things:

1. Subdivision Modifier to main object (dont apply).
2. Subdivide secondary object (apply dubdiv. mod.).
3. Add Boolean Modifier to main object and apply it (with the secondary object selected of course).
4. When youre done modeling, apply your Subdiv. mod.

I subdivided the object that I wanted to subtract (In your case the "drillbit") and then applied the Boolean to my main object. This worked just fine and I have nice and smooth edges where I "cut" into it. I hope I didn't just repeat the prior answers and could maybe even help someone.

My order of things:

1. Subdivision Modifier to main object (don't apply).
2. Subdivide secondary object (apply Subsurf modifier).
3. Add Boolean modifier to main object and apply it (with the secondary object selected of course).
4. When you're done modeling, apply your Subsurf modifier.

I subdivided the object that i wantet to subtract (In your case the "drillbit") and then applied the Boolean to my main object. This worked just fine and i have nice and smooth edges where i "cut" into it. I hope i didnt just repeat the prior answers and could maybe even help someone. ;)

My order of things:

1. Subdivision Modifier to main object (dont apply).
2. Subdivide secondary object (apply dubdiv. mod.).
3. Add Boolean Modifier to main object and apply it (with the secondary object selected of course).
4. When youre done modeling, apply your Subdiv. mod.

I subdivided the object that i wanted to subtract (In your case the "drillbit") and then applied the Boolean to my main object. This worked just fine and I have nice and smooth edges where I "cut" into it. I hope I didn't just repeat the prior answers and could maybe even help someone. ;)

My order of things:

1. Subdivision Modifier to main object (dont apply).
2. Subdivide secondary object (apply dubdiv. mod.).
3. Add Boolean Modifier to main object and apply it (with the secondary object selected of course).
4. When youre done modeling, apply your Subdiv. mod.