Yeah, chain is routed properly but I don't think that frame was designed for a derailleur. The hole that small bolt is in is for fenders. You'll need to drill and tap a new hole pretty much right behind where the axle is, just a little above the axle, not right on top as in your setup there. Then there's usually a crescent shaped ridge on the derailleur claw that might keep it from sitting properly, so you'll have to file that down. Removing and replacing the rear wheel would be kind of a PITA with this setup but...

Here's a pic of a happier claw derailleur setup.