Does this do what you want?
I think the reason you might have been having problems is down to the way that mouse messages are clipped to the parent module. In your example the mouse area is inside the Knob Dial module which itself is inside the Shadow Knob module which is then on the main module panel.
Mouse messages are only received by a module if they fall within the module's active area. The Knob Dial is 4x4 squares in size so it doesn't matter how big you set the mouse area, you'll only receive messages in that 4x4 square.
Might be clearer in a diagram:
Here your Knob Dial area is shown as 'A'. This equates to the yellow dotted area in the main knob (also labeled 'A'). To make the mouse area bigger you need to resize the modules concerned as well as change the inputs to the Mouse Area component, which is exactly what I did. The knob dial module needs to be 8x7 in size to get the effect you want.