Figured out the problem with the brake. I must have tightened the bolts too tight which deformed the hub. Removed the sprocket and reinstalled, everything works now.
I didn't make an entry last night due to my frustration so I guess I'll go ahead and do it now.
I started by removing th back wheel and then removing the coaster brake arm. It's as simple as sticking the box end of a combination wrench on the arm, then loosening the jam nut that holds it on.
The arm and dust cap come right off after you remove the nut. I had to grind the lip off the dust cap so that I can reuse it with the sprocket. This is after I started to grind the bottom lip I ended up removing it entirely.
I then cut one of the rubber couplers between the holes and mounted it on the hub.
I put both sets of metal backing plates inside the wheel making sure to stagger the seams. I installed the rear sprocket then checked it for runout by holding a wrench at a fixed point and listening if the sprocket hit it. I then marked the bolts for a star pattern and tightened them in sequence. I used a sharpie, you can remove it with rubbing alcohol. I torqued them to 10.5Nm which is standard for an M6 bolt. For anyone interested it goes 1 9 4 7 2 5 8 3 6