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If I select both brushes it just converts to static mesh but the yellow section is not "cut out". Is that even possible
Subtracts cannot be turned into static-meshes, a static-mesh can only be solid.
You can make the whole assembly solid by intersecting the construct and converting the intersected brush into a static-mesh. Beware though, the brush will probably have weird cuts. Since lighting on static-meshes is based on the vertices, it might be hard or impossible to have correct lighting. In your case, however, this will probably not be too problematic, as you geometry is simple.
Because the "void" in UnrealEd it actually not empty but solid matter.It did work guys ! Just not in empty space