This picture should help. The large barrel washer mounts in the front. I think you knew that because that side is threaded. On the back there is a brake ferrule similar to the ones by a brake caliper. It has a shape I haven't seen for brake calipers though, but I think a normal ferrule should work. You can see it on the outside of the base, where the white cable comes in.
The lead button attached to the stock cable rides on the inside of the tabs on the base, on the front side of the drag brake arm, which is the flat side. There is a small spring that is included on the front end of the lead washer and fits INSIDE the large barrel washer. It is almost the size of a spring you would find in a click top ball point pen.
So, when the brake is pulled, the lead button pulls the rear brake caliper tight for "drag braking". When the arm is released, the small spring in front of the lead washer provides some additional push to get the cable back in place for normal braking. You may be able to get it to work without the spring, as the rear brake caliper has tension from the brake spring, so it may pull the cable back in place fine.