Hi Fast,
I would guess that you would be better off to paint the pulley flat black with the exception of a 1/2" shiny spot. Or even better, a small piece of the special reflective tape.
Your sensor being ON for the large degree of rotation leaves it more susceptible to inadvertent switching.
Much less likely to pick up an anomaly by watching the black disc for the relatively narrow reflection.
Typical diffuse reflective sensors that I've used generally work most reliably this way.
Peters may be different though, I haven't researched his model.
Regards,
Russ
edited for spelling