Probably the most important thing to consider is the wheels. All other things being equal (which they never are) 26" wheels will be stronger than a 700C road wheel, and it might be that the existing wheels were well built to begin with and are still suitable for touring use now.
However, given the age of the bike, I suspect that the rear wheel might be 126mm (measured between the locknuts, aka Over Locknut Dimension, OLN or OLD), and that the wheel has a freewheel rather than a modern cassette (
explanation of the differences here).
Depending upon the quality/condition of the rear wheel, it might be viable to continue to use it, and just re-grease the bearings, ensure that there is no play in them, and replace the freewheel if it is excessively worn (likely given the age, but maybe not if the bike has not been used much since the freewheel was fitted/last replaced). You can still buy freewheels, e.g. from
Spa, although you'll need a freewheel remover tool and chain whip to take the existing one off (and the freewheel tool might be different to the one required to take off the replacement freewheel when it eventually wears out).
Other considerations with the freewheel are:
- the hub axle is more stressed on a hub that takes a freewheel than one that takes a cassette, because the right hand bearings are located much further inboard than with a cassette hub, and consquently much less of the right hand axle is supported by the bearing on a freewheel hub (look at the photograph of the two types of hub on the Sheldon Brown website link above, and you will be able to see why that is the case). Axle breakages are not common, but the heavier the rider, the more luggage carried on a rear rack, and the rougher the terrain, e.g. bumpy off road at speed, the greater the risk that an axle will break.
- gearing options, in particular nice very low bottom gears for crawling up hills when you are completely shattered and it feels like someone's put a pallet of bricks in your panniers. Your Muddy Fox already has a triple chainset, so that means you should already have a smallish granny ring* at the front, and you just need a sufficiently enough big sprocket on the freewheel to give you a bottom gear in the low 20 inches, or better still less than 20".
This website allows you to input details of your bike to see what gears you have, and what the impact of making changes would be. I've input figures in it based on assumptions about what sprockets and chainrings you have. Note that if you fit a new freewheel with a much larger big sprocket than your current one, in order to get lower gears, you may find that it exceeds the capacity of the rear derailleur (but the existing rear derailleur might need replacing anyway). *Edit - Looking again at the chainset, it looks like the chainrings are larger than the 46/36/26 I've assumed, and I think it might be 48/38/28 or even 50/40/30. I suspect you might therefore need to consider replacing the chainset with one that can take a 24 tooth or 26 tooth inner ring. The front and rear derailleurs look like they too will need replacing.
The alternative to sticking with your existing wheel(s), is to replace the rear (but maybe not the front) with a new wheel incorporating a cassette hub, and fit either an 8 or 9 speed cassette. However, you cannot do that if the rear axle width of the frame is 126mm OLN, because modern MTB hubs which take 8 or more speed cassettes require 135mm OLN axle spacing. Since the frame is steel, it would probably be possible to get it respaced to accept 135mm hubs by cold setting the rear end (aka bending it). If you are lucky enough to have a local framebuilder or shop that would do this cheaply, that would be one option, but normally I would expect that the cost of paying someone to cold set the frame would probably not be worthwhile: it would be better instead to buy a new bike. However, there is also the DIY option, as detailed on
Sheldon Brown's website, which might be something you would be happy to have a go at doing, especially if you take the view that the frame has no great monetary or sentimental value. In your shoes, I would be very tempted to have a go.
With regard to the front wheel, you might not need or want to replace it, i.e. just overhaul it and regrease the bearings. However, you mention a dynamo. You can spend a lot of money on hub dynamos, and something like a Son would be overkill/too expensive. However, Shimano do some quite good dynamos which are inexpensive. Decathlon sell
this wheel with a Shimano dynamo. It's incredibly cheap - you would probably have to pay more to buy that dynamo hub on its own from a lot of retailers. It's only a single wall rim, which is not as strong as a double wall rim, but if you are not riding hard off road terrain, a heavy rider, or using front panniers, you will probably be able to use it for touring. Pair it with Busch and Muller front and rear lights and you would have very good lighting. You could probably also configure the lighting/wiring to allow you to charge a phone or battery while touring. I think Taylor Wheels, an online german wheel builder, might offer some similar good value wheels with Shimano dynamo hubs, and it might be worth buying a slightly more expensive such wheel from them to get a better double wall rim and the reassurance of a better standard of wheelbuilding than you would get from a factory wheel from Decathlon or Halfords etc. Taylor Wheels might also be a good source for a new rear wheel.
