Great catch, FB - i was thinking it could not have always been that way but never addressed it directly. The chain could indeed be the right size if the wrong derailleur was installed, which is why I refused to come to the conclusion that it was too long. I should have told him to get a new derailleur if the chain sizing was correct. The freewheel is not a mega, so the chain would not have needed to be sized too large, and the chainwheels look to be OE. That Shimano Tourney style SIS was a very common low end replacement at a lot of shops and online. It actually work passably - I had one on a bike when I was in a low income period, but I believe that model was at best 6 speed compatible - note the op's bike has a 5 sp freewheel.