"The most cost effective option would be to buy a trailer and go with what I have,"
Yes. As long as it has low enough gears to go up whatever hills you don't want to walk/push up and a way to carry the gear you NEED.
" however I'd prefer to have at least a steel frame."
Why? Frame material is not important.
" I've been watching ebay for some time, and it seems every bike set up for touring sells pretty high compared to their non touring counterparts."
Touring bikes are a niche market. The people who want an official touring bike want an official touring bike and will pay for an official touring bike.
" So my question is Would it be cheaper to outfit, for instance an old lugged Raleigh Grand Prix with proper components for touring and buy a trailer, or just buy a new trek 520? Along with that is the question, do they still make components that would fit on an old raleigh frame."
Depends on how much outfitting you want to do. Presumably you have a 5 speed freewheel in back and a double crankset. New 5 or 6 speed freewheels to fit your current hub and frame spacing of 120mm are available everywhere. Nashbar has a 6 speed for $10 on sale now. You can go to your local bike shop and they will dig up a 5 speed freewheel from the basement. Get one with as big a rear cog as possible. You will need a new long cage rear derailleur to clear the big cog most likely, and take up the chain wrap. $10 to $25 at Nashbar. You're using friction shifters so any rear derailleur will work. Local bike shop may have an old one laying about for $5. Triple crankset and bottom bracket. Nashbar has mountain bike cranks for $35 or less on sale. 42-32-22 rings. Nice and low gearing. Square taper bottom bracket to fit, $10. Triple front derailleur to clamp on your seattube. $10 or so at Nashbar. Any will work since you are using friction downtube levers to shift it. New 5-6-7 speed chain, $4 Nashbar. All of these gearing changes total less than $100, before 10% or 20% discounts at Nashbar. Your Raleigh uses standard British threading for the bottom bracket and rear derailleur hanger. No problem finding parts. Freewheel has to be the right width, more or less, to fit between the rear dropouts. No problem finding parts.
Racks to carry your gear are cheap too. $40 for a Blackburn Expedition in back and $40 or so for Blackburn low rider in front. For the rear, you may not have official eyelets to bolt the rack on. You can use P-clips to put the rear rack on and do not put much weight on it and it should work. For the front you can bolt the low rider arond the fork leg with the included U bracket and use a P-clip at the dropout. Should work fine. Less than $100.
I would also suggest you acquire a fair amount of bicycle mechanical skill before doing your tour. Make sure you can overhaul everything on your bike and it is working good when you start. Know how to true wheels since they might fail if your bike has been abused in the past and was not of the highest quality when new. Maybe rebuild your wheels before the trip.
