It’s difficult for me to explain what I’m trying to achieve, hopefully this image helps illustrate what I want to do.
This is the final product I’m trying to achieve (done in photoshop).
When I try to mask the square area it screws with the other masking layers I have going on. Not sure if this complexity of masking can be done in illustrator? Or, I’m doing it completely wrong..
Draw a circle the same size and thickness as the blue circle. Cut out the square from the new circle in the same place as above. Do this by selecting square and circle and hitting pathfinder/divide, ungroup and delete square. Your new circle is now a C shape. Place it exactly over the blue C, select both, right click and select Make clipping mask. You should now have your blue C with no dangley bits. Should reproduce fine in PS.