This is one of those tricky problems that doesn't have an easy fix. The physics behavior generally doesn't work well with other behaviors, working in an unexpected manner.
Here's an example that mostly fixes it while still using the 8 directions behavior, with an explanation afterwards:
What this is doing is making sure that all physics objects are constantly in motion, even if just a tiny amount. Two physics objects that are in a state of rest can't interact.
Since the green object is being moved by another behavior, the physics behavior always considers it to be in a state of rest, thus no interaction will occur between it and any other physics object. To fix this, you must stimulate the objects yourself with a small amount of force to bring them out of that resting state, and thus, interact.
Ultimately, it might be a better idea to try and create the movement you're needing solely with the physics behavior. While it might be tricky to get it working initially, it will probably prevent further headaches with this issue in the future.
I hope this helps.