Yep, there is a knurled knob that replaces the "star wheel" on these Ambassadeur "D" models. The drag is still there.
The reason that ABU modified this part is because the handle on a "D" can spin backwards. During the heat of battle it would be too easy to bump the star wheel and screw up the drag setting.

In reality, because a drag is still present, these are not true direct drives, but sort of a hybrid that offers the best of both.
It's been said that they were designed to yard bass out of heavy cover and most were sold in the US.