The one you have pictured in your for sale ad by that MX7000 is a Basic ArrowStik controller (PN 7410). There should be a wiring diagram sticker stuck to the bottom of it:
You are correct in your understanding of how the controller works. Regardless, here is a summary off the top of my head.
Hook the black wire that comes out the back of the controller to a good ground. The 7-pin green plug takes the brown, orange, violet, yellow, and blue wires (positions 1 through 5) and connects them to ground to complete the circuit and light the lights. Position 6 isn't used for anything important, see the manual for details on its real use. Position 7 takes a wire that supplies the controller +12v DC. Don't forget to connect the red and red/white wires of the ArrowStik to a constant +12v DC source.