HI mike,I have just adjusted my handbrake on my corolla.It was dead easy.What you have done so far is correct,what you have to find know is a little groved adjustment wheel next to the spring in about the six o'clock position through the little hole,use a torch it's quite difficult to see. With the hand brake off and the car safe so it won't roll adjust the wheel with a flat screwdriver downwards until the brakes bind with the disc then back it off until the brake is free.Bingo its done.If you go to the web site, http://toyotaownersclub.com/forums/index.php?showtopic=74467
Ray
February 2008