Brake problem - Craftsman lawn tractor?

Tractor model 917.271555 - DANA transaxle model 4360-140
My brakes were not holding, I verified the adjustment per the owners manual.
I then ordered new "Friction Pucks" (brake pads).

To finish mowing, I shimmed each existing pad out about .030"-.040" (to simulate thicker pads) and reset the adjustment. This did not work.

I noticed the linkage / adjustment rod had a deep gouge worn about 1/3 way through it where the brake actuating lever pushes on it when the brake pedal is pushed in. I made a thin steel sleeve to slide over this worn area. This did not help either.

I then tried adjusting the lock nut holding the actuating lever on, both inward and outward, but still no good.

With the shift lever in Neutral, the brake depressed and locked in place with the brake locking lever, I can still easily turn the rear wheels.

Any ideas?
Why would my attempt at shimming the pads outward not work?
Also - How do I re-adjust the lock nut on the actuating lever properly when I put in the new pads? (This adjustment is not described in the owners manual.)