Compressing a compressed file never works. Especially with compression routines that try to eliminate repetition (which is what a lot of them do). When the repetition is eliminated and you try, again, to further eliminate repetition it tends to backfire.
Even so, You can't put a file in the game that has more than one level of LZS compression in it. That compression is designed to be streamed out. When the game tries to run it it will only stream out the compressed file, but not the original RAW decompressed file.
No, I'm not explaining it well at all. Bottom line is, you can't do what you're trying to do. The only way for that file to be smaller is to have the original file to be smaller or have more repetition in it.