That Schwinn looks like a good city bike; it's pretty similar to what now is called a hybrid or comfort bike. It appears to be an '84 Mesa Runner, an early mountain bike.

Advantages:
Cheap
Comfy riding position
Fatter tires for crappy pavement and curb hopping
Easy to add racks and/or fenders

Disadvantages:
Heavy
Slow (upright riding position)
Needs new tires (STAT!) and a tune-up

As for eBay, it's only good if you know exactly what you're looking for and are willing to pay shipping (not cheap for bikes). It may be a good resource for local sales, though.

Here are some other decent options from North Bay craigslist, that look to be roughly your size:
Rockhopper, $130
GT Talera, $80
Gary Fisher, $90
Univega, $100
Bridgestone CB1, $175
And (Oh hell yes) a Stumpjumper for $198

The Stumpjumper is the best deal; the Stumpy was Specialized's top-end mountain bike at the time. I'd be worried about the shock; it may be worn out and need a rebuild. Front shock bikes run that risk, and that's why rigid fork MTBs are nice for cheapo used bikes (simple and durable).

However, the Stumpy is a medium frame so it may be too long.

The CB-1 is a nice bike; it's ready to ride as a city bike That's what it was designed for, C ity B ike, 1 (top of the lineup).
The Rockhopper and Gary Fisher are good bikes for good prices, and they look to be in good shape.

Best of luck!