I wanted to post the same question.
Still loud sounds for my elite grinder / drill
Mod is activated.

Edit:

It works, for some reasons it wasn't in the aktive mod list, dispite I set it to.
"activated" it again. Now it's working

The tools are terrible sounding in this game. Space has no sound so maybe they should be muted while in space. And my hands are broken why cant I just grab an item that can be pushed or held on to? Maybe some AI characters

not sure if you ever figured out why the sounds are still loud but i think i know the answer. Looking at the script in visual studio, it looks like the sound files being modified are only the ARC files, not the REAL files. So if in your game settings you chose to have realistic tool sounds then its possible that they arent getting their volumes reduced.

technically there is sounds in space because of tool vibrations from tool to suit to the ears. So there is some sound in space but atmosphere can change to way sounds travel. Environments with high Co2 for example will absorb higher pitched sounds and low freq sounds will travel farther.
You can still tweak the settings to your liking. MoonMoon is correct, you have to play on "arcade sound profile" for this mod to work hence the "arc" in the file name which stands for "arcade". You open the workshop/mod folder and open the config file with an editor. In there you can set the volume for some sounds.
You might want to lower some of these:
The name is the sound file played and the number to the right is the volume.