you're definitely meant to remove the padding from the bottom part of your brace, then do what Luker described. Just strap it on below your knee, then put the brace over the top.
Mine came with one originally, but I've never used it. It just so happens I was playing around with it the other day though. let us know if you think it's useful!
I'm pretty sure mine has instructions, might see if I can scan them for you or something, if you're interested?
Snooze, you only need to use the AMS if the brace is slipping down, but mine never did. the trick is to wet the straps before you put it on, because they stretch when they're wet. You shouldn't need to do anything to start using yours in the water. look up 'ossur' if you want to order parts though.