I got a similar heating pad from Amazon:
Amazon.com: Sunbeam Health at Home Standard Moist/Dry Heating Pad: Sunbeam: Health & Personal Care
Here's how I use it:
1) Take it out of its casing and remove moisture sponge thing.
2) Turn it on (set it to Medium) and let it heat up for 5-10 minutes.
3) Run some hot water and hold the sponge under. Wring it out nicely so it isn't dripping
4) Put the pad back into its case, with the sponge present
5) Fold one long edge back (so the new "edge" becomes closer to the center)
6) Wrap it around pecker like that.
Usually, leaving it on medium heat is fine. Sometimes, if I let it preheat too long, I will lower it to low (or even just turn it off) if I feel it's a bit too hot. I hold it well away from my balls, for obvious reasons.
Note: I'm a newbie, so I'm not sure if this is the best way to go, or the right heat level. It's just how i've been doing it. It comes out nice and warm, but it's hard to do stretches at first cause it's a little wet, so I lose grip.