I think using the Schwinn is a good choice for the C&O Canal Trail. One thing I didn't mention over at C&V is that the almost complete flatness of the trail means the need for gears is non existent. Adding a larger chainring might be a good idea.

I was able to install a Topeak rack designed for an MTB with disk brakes on my daughter's Cannondale Comfort 400. It also has 700c X 38 tires and a compact frame. It was about the third rack from the LBS. I suggest taking the bike to the LBS to see what they can fit. I wish I had a picture of her's, but here is a link and a stock photo.

http://www.amazon.com/Topeak-Explore.../dp/B000FIAVHE