The knots go on the outside of the mast. Both lines go thru, and get stopper-knotted on the outside. It's also possible to simply tie a loop so there's only one line thru the mast track. I misdrilled mine (too far aft) and had to use JBWeld and make a little "bullnose" on the top of the bolt rope so the sail would skid past the halyard loop without sticking.
Good luck!