Sensor strength * antenna size = Total Sensor Strength is indeed what that slider represents.
Just whipped up a test game with a ship that had a thermal signature of 100, and the ranges match up perfectly. At six the ring has a radius of 6 * 100 * 1000 = 600k, 16 gives 1600k, and so on.
Now that I know how the hell that thing works it'll be very useful for skulking around with shrouded engines.