Let me clarify. The current must flow into the Vout pin of LM2687
Current flows *into* output. This is how every negative supply works. No problem here.
My understanding is that the current flows from drain to source in NMOS transistors not the other way around.
Yes you are right and your question is valid. Anyway - If regulator says it is for negative voltage then you shall rely on this information disregarding how mosftet is shown in it's internal circuit
illustration which definitely is far from actual circuit. [edit] - Because NMOS you know, may differ from MOS which is used internally in that particular IC. Just accept that it works and proceed further with your project