Step 5: Drill 3 holes: First Hole
The way that this should work out after you drill these holes is that there will be a spout in the barrel at the base which will face outwards, an overflow which will shoot out to the side from the top of the barrel wall, and a downspout adapter at the back of the top of the barrel which will back up to the wall of your house.
Use the 1" Forstner bit to drill a hole about 4 inches from the bottom of the barrel on the side wall so that it will line up with one of the barrel plugs. It is critical that it lines up with the barrel plug. This hole will be for the spout.