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The diode is important. Remember, the contactor pull coils are highly inductive, meaning that the current going through its hundreds of windings has a lot of momentum. This causes a voltage spike (and large arc) on the switch contacts powering it when the circuit it opened (contactor turned off). The diode installed will prevent this arc from occurring, allowing the inductive "momentum" to freewheel and quickly subside, saving either the contacts in a relay or transistor in a controller.
The terminals on your contactor are grouped in pairs. Two are connected together on one side of the coil, and the other two on the other side. Take your multimeter and check the resistance between them - you will find little resistance between the terminals next to each other and coil resistance between these two and the other two. The extra terminals are a perfect spot to hook your freewheel diode to!
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