...there is a small wedged tab on the rudder itself. It rarely clicks in place when you drop the rudder; but if it does like below it then becomes impossible to raise the rudder using the handle. It feels if you pull the cord any harder something will break!
Should I rub the tab down a bit with some abrasive paper?
The tab is to lock the rudder in the down position, which is exactly what you want. If it does not engage, rudder control is imprecise and uneven -- higher speeds can partially lift it. Having to compensate by putting more tension on the down line can make the rudder hard to turn and lead to premature line failure.
To help the tab engage, wiggle the rudder control (tiller) while pulling on the down line with the boat in motion. To lift, again wiggle left and right while lifting the rudder just prior to landing.