Holy bagoly.
Ok hang on there brother. There's two ways to go about this that are way easier than the struggle you're having. But for what it's worth, freewheels are super cheap and worth replacing in this situation anyway.
Option one: those two dots spin the bearing cover off and it's reverse threaded. You can literally use just a screw driver and a hammer to bop it free I'm one strike. Then it will spin right off. At that point bearings go flying everywhere and the gear falls right off. What you're left with is the inner part which is still threaded to the hub. From there, stick that part in a vice and turn the whole wheel like a big pirate ship wheel and it spins clean off. Then simply replace with a new one.
Option 2: we did design these super elegant free wheel removal tools which give you lots of leverage or you can use the other kind but I suggest using a seat post on your ratchet for leverage. Sometimes they're a son of a bitch but if you have a friend, hold the wheel and set your ratchet about 6 inches from the ground and simply have your friend stand on it gently and it will break free instantly. Usually what I do is use the mlm tool BEFORE taking the tires off so I have a bit more grip, then simply sit on the couch, hold the wheel and put my foot on the bar and wham, freewheel off.
Option 3?: you can also set the tool you have on a vice, and spin the wheel, can't think of why that wouldn't get it off in about 3 seconds.