Can I create a tool with an undercut?
No, the Form Tool will not allow a bit with an undercut to be modeled since toolpaths using bits with undercuts cannot be previewed.
If you need to use a bit with undercut in a project, you can create a toolpath using a standard bit but run that at your machine with the undercut bit installed.
For example, you want to create a T-slot using a T-slot bit. You can create a toolpath using an end mill and preview that, realizing at your machine there will be a horizontal slot cut at the bottom of the toolpath. To do this safely and successfully, you need to have a good understanding of toolpaths, how to set up a single pass toolpath and possibly the use of Lead-ins and Lead-outs.
If you need help setting up a particular toolpath, asking on the Vectric Forum should get you the help you need.