I installed them like photo 2 with the flanges facing the front of the car. I had the same problem, the little flanges would catch. 1st, I dremeled the flanges down a little bit and round the corners off. 2nd, be sure when you fit the brake pads you leave them kind of loose because for some reason mine would tighten up when I put it all back together. I ended up leaving off the 2nd brake pad and it works just fine. I think if I had played with it a little more I could have gotten it smoothed out with both brake pads installed.