well after you fix the brakes.

I adjust them up with the same method. only you don't have to hold the adjuster arm back out of the way.
I run them up till I feel a drag on the drum. have both sides back together. step on brakes. pull the parking brake up and release.
then see if there is still a drag on the drums. if not I tighten down a few more clicks untill I feel the drag again.
get back in and step on brakes. pull ebrake and check again.
if there is a slight drag I back the star wheel off, using the two screw drivers again untill the drag is just gone.

and thats how I set my rear brakes.

edit.. ps. I also take a grinder to that outer lip to remove it.
you will see the little 1/8th inch or so that I am talking about. don't grind to much.
just smooth it down a bit.
oh, don't forget brake dust is bad. use brake cleaner not compressed air unless you are wearing a good filter mask.