[Bolts]

I definitely would NOT use the engine.
If the taper is rough it is possible the keyway and/or keys are damaged. Check for worn keys and for cracks in the axle groove. If you see cracks stop and seek help here at the forum.
Just remove drum, remove the axle key, dress the rough spots on the taper with a fine file lightly. Wipe everything clean including the inside taper of the hub. Apply the compound sparingly on the axle taper. Put the drum and hub on and tighten the nut just tight enough so the drum is a little hard to turn by hand. Rotate the drum about 50 times, tightening the nut a little bit. You will feel it as well as hear it and know how tight to make the nut. Remove the drum and hub periodically to check everything. Repeat as needed. Clean everything off real good inside and repack the bearing when you're done so the compound doesn't ruin the bearing.
Note if both wheels are off the ground you will need to prevent the opposite wheel from turning when you rotate the drum. Also, you can install the tire to help with the turning if you need more leverage.
Thanks to Alan, ford383v8 for how to do it. I don't think I left anything out.