You are correct that while the OM-20 uses TTL off the film metering for regular exposure settings, it doesn't offer TTL off the film flash metering. That means either manual, guide number based exposure calculations for flash use, or using the flash's built in auto exposure system.
The Metz flashes have really good built in auto exposure systems. I would recommend you use that.
You have the cord set up right.
The manual for the flash (available on Mike Butkus' site) describes how to use the auto exposure system - you set the white line opposite the green number, set your camera aperture to the green number (or one stop smaller for fill) and the flash's auto exposure system adjusts the flash output for you.
You need an OM2, 2n, 2s, 4, or 4T plus the Olympus compatible SCA module for TTL use.