A 18650 battery is fine, but note that when fully charge, it will be supplying 1 volt over spec... which will result in added heat for your module. Make sure to operate a reasonable duty cycle, or you can always use a 1N4xxx rectifier diode to drop your voltage slightly, and introduce reverse polarity protection.
You should also check with a multimeter, but your RED wire (+V) should be constant to the brass 'case' around your diode. This means you'll most likely have to wire your host to be case positive... with the + side of the battery facing the tailcap.