Kitchen Faucet Mounting Issue

Hello everyone,
Shown is the underside of our kitchen faucet. The assembly is held against the wooden panel by the hex nut, which I had been tightening every few weeks. The assembly moves to the side when it is loose and some splashed water drips in, as the edge of the drilled hole in the countertop becomes exposed (you can see the wetness in the wood). I had put some paper in between the wood and the white plastic and then I tried something not as smooth (sandpaper) – hoping it would provide some resistance against moving side to side. The movement/looseness I think comes from constant use of the swing-arm of the faucet.

My questions are (1) is there anyway to improve this set-up, so it would be more stable (2) I am now worry about water that is already in the wood and any that will potentially seep in there in the future. Is there anyway to dry it or attach some kind of dessicant onto the wood?

Thank you.