Recent local simulations of the field-reversed configuration (FRC) have reported drift-wave stability in the core and instability in the scrape-off layer (SOL). However, experimental measurements indicate the existence of fluctuations in both FRC core and SOL, with much lower amplitude fluctuations measured in the core. With the updated cross-separatrix capabilities of the simulation code used in this paper, nonlinear turbulence simulations find that linear instabilities grow in the SOL, generating fluctuations which spread from SOL to core. After saturation of the linear instabilities, a balance of the inward spread and local damping in the core is achieved. The steady state toroidal wavenumber spectrum shows lower amplitude core fluctuations and larger SOL fluctuations with amplitude decreasing towards shorter wavelengths, which are consistent with experimental measurements.