I have a 12/70 car that is having a serious rear brake issue.

Here is the background. I have an early 2/71 parts car (still lots of Series 1 pieces) that I removed the suspension from, had sandblasted and then powder coated. As I removed suspension pieces from the12/70, I replaced with the refreshed pieces and torques to spec. At the same time, I rebuilt the halfshafts, replaced and greased the u-joints, replaced and greased all bushings, replaced shocks and springs (Koni yellows and Eibach springs), replaced all bearings, and packed the hubs with fresh grease.

The last piece of the puzzle are the rear brakes. I replaced the pads, added rubber new brake lines, bled the system. and put the original aluminum drums back on. I did not replace the cylinders as the old ones looks OK and are prohibitive to replace unless I swap lines and go over to the 73 ones. I also did not replace either the master cylinder or rebuild the booster.  I ran the car for a block and heard the most god-awful grinding noise. I bought it back home and parked it. The drums had a hard time coming off (each time actually). The E-brake also will not hold.

Today I replaced the drums with new steel ones, and worked the e-brake to self adjust, I seemed to work for a bit (always more than 4 clicks) but then did not. I ran the car and the noise was just as awful. Even the neighbors noticed it!  I ran it less than a block and brought it home. It sounded like metal on metal grinding.  I only get the noise the when the wheel has weight on it and is going forward. In reverse, or when the wheel is spun while jacked up, there are no issues. Any advice for what to do next?

Sometimes the outer lip on the backing plate gets bent  in and will rub on the drum as it rotates, it can sound very loud but you should be able to hear that when the car is up on jacks and you are spinning the wheel.  Do you have a rear sway bar that might be rubbing on one of the halfshafts as they turn? Does the sound correspond with the speed the car is going, is it constant or intermittent?

Maybe get underneath and check for anything rubbing on the driveshaft or halfshafts, could you post a couple of pics of the rear brakes with the drums off?

You should see fresh scratch marks somewhere if it's making that sort of sound. I went from aluminum to steel with no issues that I remember 

I've always put the shoes in the adjusters slots, put the spring on then press them flat against hubs. Then put those pins in.

If no visible wearing is found, could be a bad bearing. They can make quite a screach.