I'm doing exactly the same conversion you are - with a similar bike. I just bought a Ross Europa(Ross's cheapo high ten model) on craigslist for $60... made in the late 70's or early 80's. It was a ten speed with a 5 speed freewheel cassette. I tossed front and back derailers, same chrome "ringy things' on rear wheel and chainring(chainguard) as yours. It has a wide Schwinn seat, which I like, and the bars and grips are also Schwinn. Stem/neck enbossed with JUN. Wheels are original 26 x 1 3/8 steel with shimano hubs. So far I've stripped the bike of everything, sanded down to the bare steel(final sand was 320grit), degreased frame with acetone, applied 2 coats Dupli-Color sandable primer and 3 coats of Dupli-Color Acrylic enamel color(machinery grey). Once cured, I may just buff it out with compound and polish, which I've concluded will make it easier to touch up later, sans clearcoat. The enamel looks great so far and seems to have adhered very well. BTW, Duplicolor enamel clearcoat is the same formula as their colors. It won't cure any harder or be more durable or glossier(I called the 1-800 # and spoke at length to a rep). When painting it's important to shake the can often .. and with Duplicolor enamels you must apply all coats of paint within one hour.

As for reassembling as a single speed: the bike has one of those one piece crank sets with the cups and bearing cages. I tossed the extra outer chainring, and am left with a steel chrome 39t ring. I removed the 5 speed freewheel and got a 16t freewheel to screw on. I won't know until I start reassembling how my chainline will fair. I may just cold set the frame as mentioned above and on Sheldon Brown's site, but I'm prepared to go the spacers and redish route if necessary. I don't even know if this gear ratio will be ideal for how I ride until I ride it! I may need to replace chainring with 44t? So far I've spent $60 for the bike, $30 on paint and primer, $15 for the freewheel and $20 for a decent new chain. So $125 total so far, and I'll probably get new tires and decent pedals too. Brakes are good. Having the bike apart has given me the opportunity to paint the frame, clean up my BB and head sets and other components, clean and regrease all bearings including wheel hubs, and generally learn more about bikes.

Anyway - I'm with you on the whole hands-on, learning experience approach for your first rebuild/conversion project. This is my first as well. I'm a big believer in doing the best you can with what you already have to work with. I already know that after I tool around on this for a while, while having learned a lot about bikes, I will eventually build up a primo single speed from scratch. For now, I would suggest doing this one as cheaply as possible, while still making it a good, fun, single speed that you learn from and enjoy.

I live in Manhattan (LES), maybe meet up sometime - ride the Williamsburg bridge on our new machines! Keep me posted on your progress. I'll put up some pics soon of mine.