In what ways is Douglass’s Narrative a work of abolitionist propaganda? In what ways is it a historical source on the nature and arguments of the abolition movement in antebellum America?

Propaganda is information used to promote or support a particular point of view. Propaganda is usually understood to be distorted or false, but Douglass's work is not that type of propaganda. It is propaganda, however, in that it is consistently "on message" that slavery is an indefensible and immoral evil.
The Narrative also acts as abolitionist propaganda in that it weaves in answers to the objections to freeing slaves that white people most often made in that period. One objection was that slaves, if questioned, usually said they were content and happy with their lot. Douglass vehemently opposes the truth of that idea, stating that slaves are afraid of severe reprisals if they do not lie. He recounts the story of a slave who complained about his lot, only to be sold down South into a much worse situation.
Whites also used the argument that the slaves' tendency to sing showed they were happy. Douglass argues that this singing derives from their deep grief over their enslavement. Finally, pro-slavery individuals often stated that the Christianity of the owners made them more compassionate to the slaves: Douglass argues that the opposite is true, stating that "conversion experiences" create harsher masters, who now have Biblical dispensation to oppress the slaves.
The Narrative is most powerful as an authoritative first-person account of what it was like to be a slave from the perspective of a slave. It aligns with abolitionist aims in unequivocally showing slavery to be a cruel and dehumanizing institution that destroys the lives of slaves and corrupts the souls of masters. Near the end of the account, Douglass also provides information about abolitionism directly, such as describing the way The Liberator, an abolitionist newspaper, spoke to his condition and fired him up to become part of the abolitionist movement.

In Frederick Douglas's autobiographic novel Narrative of the Life of Frederick Douglass, An American Slave, Douglas tells the horrific story of his life under slavery and his path to freedom. The books serves as an abolitionist piece due to the horrifying truths that are told by Douglas and due to the fact that Douglas was a staunch abolitionist who spent his life as a free man working to end the evils of slavery. He wrote from an abolitionist perspective and it permeates the pages of his novel.
This book is a historical source on the abolitionist movement, as it is Douglas's true story. Readers are able to gain perspective from a man who was both formerly enslaved as well as a fierce and determined abolitionist. Exposing the horrors of slavery and making moral arguments against its use was a major part of the abolitionist movement. Douglas's autobiography uses this strategy to bring the antislavery appeal to the hearts and minds of those reading and to provide hope and encouragement to anyone who was still enslaved and reading his words.

Frederick Douglass's narrative is preceded by two introductions. The first is by William Lloyd Garrison, the editor of the abolitionist newspaper The Liberator. Garrison recalls having seen Douglass speak at an abolitionist conference in Nantucket in 1841. Garrison is a white man who must vouch for the credibility of Douglass, a black man. Many readers might have thought at the time that a former slave could not have been as eloquent and learned as Douglass, who writes with a literary, learned style. At the time, Garrison, and Wendell Phillips, a white Boston abolitionist who wrote the next introduction, had to give Douglass his bona fides, or his credibility. Douglass's work is a product of the abolitionist movement and uses its arguments, such as that slavery degrades the white people who perpetuate it. The work is also an artifact of the abolitionist movement and shows that it was controlled by whites, not by blacks.

Frederick Douglass's Narrative is one of the best known slave narratives. New England abolitionists, particularly William Lloyd Garrison, the editor of the abolitionist newspaper The Liberator, encouraged Douglass to tell his story of life on a Maryland plantation in an effort to end slavery.
Because the narrative is based on the actual events of Douglass's life, it serves as a historical source. It is a key piece of abolitionist propaganda because the tales of Douglass's suffering gave credence to abolitionists' insistence on the evils of slavery. 
Douglass was the product of rape, like many slave children. His mother, also a slave, had been raped by an unknown white man. He witnessed brutal whippings, including the brutalization of his aunt, and he suffered periods of starvation and cold. 
After spending several comfortable years in Baltimore with the ship carpenter, Hugh Auld, where he had learned to read, he was sent to work on a farm in Maryland. There, he came under the control of the slave-breaker, Edward Covey. "Slave-breaking" involved daily beatings, starvation, and, sometimes, more creative methods of cruelty. Covey's treatment left Douglass "broken" spiritually.
It is possible that if not for his literacy, which allowed him to access a world beyond that of cruelty, Douglass might not have escaped to the North to become not only an abolitionist but a living example of resilience.