Jason,
Whilst I cant see anything obviously wrong with the setup of your front brake, you have to bear in mind that these bikes are now 80 years old, and adjustments done in that period may have reduced the clearances within the drum. If the brakeplate or band rubs on the inside of the drum, then by all means fit a washer on the spindle to give a little more clearance. The "small nut" you mention looks to be standard - it should be the same size as the one on the other side that carries the pressed steel dust cover.
Hope this helps,
Eddie.