The CC DIRECT CONNECT setting should not matter for this application.
Everything else seems to be set appropriately, so it’s time to debug your set-up:
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check any routing and cabling between the Nanokontrol and the OT;
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use a MIDI monitor program on your computer (Windows/OS X?) to see what messages are arriving from the Nanokontrol when you move the faders;
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if you have another controller or can set up Ableton Live appropriately, use it to try sending the appropriate messages to the OT