This is how the inside of my Watson loader looks :

I usually have a spare dud film I use for demonstrations, but I can't find it, so I've cut a strip of paper instead, to represent the bulk reel. The side of the loader has been lifted off to show a spindle, and the bulk reel just sits on this spindle. The film is led through a slot below the red lever and outside. You can just make out the words 'EMULSION SIDE' I wrote on the paper. This emulsion side faces down in to the cassette chamber, which you'll see in the next picture.

Here, you can see the paper (film!) just emerging from the slot and touching a red wheel with teeth. You can't see it but on the left hand side there's a similar wheel with teeth to engage the film perforations, but it's black, so doesn't show in the picture. This is the cassette chamber. You put an empty cassette in here, and attach the emerging film leader to the cassette spool. The cassette goes at the bottom of the picture here where you see the orange piece of plastic, and the crank on the left will engage (when the cover door is closed!) and feed the film in to the cassette.

Here is another view of the loader :

The bulk reel sits as shown, the leader comes through the slot under the red lever and out where the words "Film leader" appear. The non-emulsion side is uppermost, and the emulsion is facing down into the cassette chamber. You can also see the drum cover on the right hand side, and you should see also the cut-out which fits over the strip of film as it leaves the main chamber and into the cassette chamber. That red knob is just the securing knob for the drum cover when it's replaced.

Any more questions, just ask!