If you want to know how to check frame fitment, see the ES wiki, middrives, bafang section. All neatly summarised in there, as is a decent chunk of summarised salient points from the different threads I have been through...
As for discs vs rim, thats really a personal preference, either will work. Consider whether you will use ebrakes and how you will (if you want to use them) attach them. using hydros, you will need a reed sensor, using cable disc or rim brakes, HWBS sensor required or use the crappy levers that typically come with the kit. see my thread on these if you want to cheap out and butcher a set of the included levers to get the hall sensor and use as a hydro sensor to save $$. Either way, another vote for discs if you are in the rough stuff, but if the budget is more important, don't be afraid to buy rim brakes, they are still decent. If it has to be rim, see if you can find something with v-brake fittings - cantilever brakes share the same fittings on the forks... so if its a super cheap cantilever brake bike - can always swap to v-brakes off another bike at a later date. I have found the free bikes I've come across with no name v-brakes super effective for zero $$.....
No need to go steel unless you anticipate busting the frame somewhere remote - advantage is that steel can be welding by most garages, aluminium requires more skill/ potentially heat treatment. Aside from that, I've done ~12,000? documented kms now on a quality aluminum frame... no need for steel and alloy is well lighter.