Right, Your reel a basic baitrunner reel, will have two drag settings, either one at the top (above the spool) and one at the bottom (Like shakespeare cypry, okumas etc) or two at the bottom (like shimano baitunners)
-- One at top one at bottom,
The top drag knob, is for main drag, ie the drag whe you fight fish, this should be set to either 2lb below the breaking strain of mainline, (use scales) or when bending the rod, where you feel happy with it (fighting curve) many people have different ideas on the tension you need
the bottom one is for the baitrunner (freespool, freespin etc) this should be set to a light tension, ie line should peel off easily, but not in the wind or from the bobbin. (this needs to be altered to where you are fishing, ie if your next to snags, you want a tight baitrunner, but if in open water, you can get away with it lighter.
-- Both drags at bottom,
With this type of reel, one is for the baitrunner and the other for the main drag, on mine, the main drag is at the bottom (they should be labeled - if not put them to different tensions then put the baitrunner, on and test it...... you can guess the rest.) and again the above applies.
I know this isn't the best of explanations, but it should help a little
Ryan