is the 17.5 finished or unfinished block size?
If 17.5 inch is the finished side length of the block, then
The 12-3/8 inches for the finished short leg length of the block is right.
The usual "formula" for cutting the squares for HST is finished size plus 7/8 inch.
Then cut the squares 13-1/4 inches - need to allow that extra 3/8 inch for the points of the triangles.