+1
http://www.sheldonbrown.com/free-k7.html
If it is a freewheel (where it just threads off like you were told), you can remove the freewheel (or not), I'd clean the outside center part, and drip lube into the center part where you see movement when the freewheel turns. You can do this through either the front or on the back of the freewheel. If you can't get the freewheel off because you need some special tool and you don't want to get it, you can just put the lube in the front works fine but excess lube may drip out the back - so just prepare yourself for that so you don't stain anything important.
If by "sounds dry", you mean loud clicking that is annoying, you could try a heavier weight lube/oil. I used a capful of motor oil once, to quiet things down a little. However, there wasn't any real reason to do this and some decry motor oil's propensity to collect dirt.
In either case, after lube, set the freewheel on some papertowels, rags, etc. Some excess lube may drip out.
If you really don't like the freewheel, you could also look for a replacement freewheel at any local shop organization that recycles or breaks down old bikes. They usually have tons and they aren't very expensive (much less than $20-$25) - just look for one that isn't worn and spins freely - even if it needs a little cleaning on the outside and go ahead and relube as above.
Lastly, if you really want, you could take the freewheel apart per Sheldon's site and then clean/lube in a more precise manner. I did this once with an old one for curiosity's sake. Like him, I agree it isn't worth it. After 5 seconds, my curiosity was satiated and the reassembly was a PITA with no real mechanical benefit for having gone through the process.