The drum turns fine without the wheel, and both the adjuster and handbrake are backed right off. I'm thinking the the edge of the shoe is binding against the inside of the drum. There are some tabs on the sides which I think might be causing the problem (shown in pic).

I've tried filing them down a bit, but I don't know how much I would need to take off before the drum frees up or there's no shoe left!
Any ideas??
As an aside, the drums are redrilled from 5x4" to 5x4.5" for better wheel choice, supposedly! Only problem is I can't find new drums that fit. The brakes are 10"x1.3/4". Does anyone know of an interchange part that would fit?