The latch presses inward toward the front sight if my memory serves me correctly. I do not recall for sure if the the latch entered a keyway in the barrel to maintain the vertical position of the front sight, but I think it did... that would make good engineering sense anyway...
I used to have about a dozen photos of this gun from different angles but unfortunately lost them in a computer crash many years ago... That's what prompted me to start archiving my luger photo collection on CD's.
John D. may have some more good photos of the gun since it was in his collection. He has a not well known skill for producing excellent photos of guns... I wish he would post more of his collection in a Lugerforum album. (John D. Hint...Hint!)