the brake assembly's return-mechanisms are kinda weak .. there are two shoe-springs inside .. These plus the light spring on the cable's end are supposed to completely open the shoes. But if there's any brake-shoe cam friction or if the cable is not well lubed and free, the brakes won't open as wide as they can.
Take the rear wheel off the bike.
Remove the large "nut" (with only 2 flats) on the freewheel sprocket side.. It comes off counterclockwise, like any normal nut. (this "nut" is actually the freewheel sprocket's hub and it all comes off in one piece.)
This axel-nut thing can be really hard to remove. You'll probably have to fix a wrench on it tight fit ..and strike the wrench end firmly with a hammer to break it loose.
Next pull the brake assembly out. It's center is a bearing so wiggle and pull the assembly off by hand.
Now you can clean up the shoes and brake drum. Use some fine sandpaper on the shoe and drum surfaces to remove rust and glaze ..
Then lubricate (all purpose grease) all the moving points in the brake assembly.. the cam and brake shoe-ends where the cam is and the shoe-pivot ends. Don't get any grease on the shoes/drum surfaces .. don't use so much extra grease that it could fling off and get on them either.
Reassembly is easy.. reverse what you did. Torque the axel nut to about 45 pound feet (600 kg-cm)
Next the cable should be lubed.. drain some oil down the sheath.. like hang the cable vertically by it's end and drip oil into it.
If everything moves easily, you can adjust the rear brake to grab hard after only 3 or 4 mm of brake-level free play... and the brakes wont drag at all.. i know because mine do it.