As you thought Mal.
The pull latch should be flipped over so it lays over the block with the padlock hole in it. This pulls the release pin into its locating hole (the raised lump behind the padlock hole) within the cap housing thus securing the cap in the down or closed position. If the latch isnt flipped over, the cap release pin still sits in its hole (it has a return spring pushing against it) if its been closed correctly, but its not locked in place, and it can work loose and the cap can and did flip open at times, this just caused damage or such to the inside which to be honest was never an issue and rarely happened (in my experience).
As to the padlocks being fitted, that didnt happen with us, there was no point and its just another key that would get lost, so … I never saw them used. Only place you may see a padlock fitted is on a static display tank or a gate guardian- And looking at the pic with the padlock on, I would say its a very old tank and one of the 2 I mentioned just.
Red fuel caps- Not on Service vehicles - private owned only. Hope that helps
Forgot to say, obviously with the pull latch over, this then sits over the padlock block allowing the padlock to be fitted and physically locking the cap down, purely to prevent fuel theft - nothing more.