Looks like the wheel cylinder has overextended. Possibly the adjusters were way too loose when the brakes were first applied. The wheel cylinders should be compressed (and checked that they don't leak), the shoes repositioned on the anchor pin and the adjuster extended so the drum barely slips over the shoes. It's possible that the retracting springs should be replaced also, but that doesn't seem to be the problem. What is the actual measurement of the drum diameter? If they've been turned too much that might be contributing to the problem.
