Welcome to the forum, glad you joined us.
This is very common with coaster brakes, here is a link to help you out.
http://motorbicycling.com/f3/help-sc...edal-2566.html
Well, I could not find the other links. Yes you need to bend the arm to get the clearance.
Some use flat head bolts on the sprocket and/or counter sink the bolts into the sprocket.
You may also need to trim the dust cover to allow the sprocket to fit correctly.
http://motorbicycling.com/f30/coaste...-mod-1841.html