Can anyone post the use of the word 'carnival' in any British TRADITIONAL song?
Curiouser and curiouser. According to the OED, the word 'carnival' in non-religious uses only dates from the twentieth century. For instance, there's a citation from 1950:
We now use the word 'carnival' in a general sense to describe a particular kind of public celebration or entertainment which includes a fancy dress procession through the streets.
But phrases like "the pretty carnival girl" seem to derive from a more specific usage of "carnival" to mean "funfair" or "circus" - and that sense is not only modern but American - exclusively so, according to the OED.
I have found out that Carnival Girl is the title of a silent film made in 1926, starring Marion Mack (who later played the love interest in the Buster Keaton film the General); perhaps that's where the author of this song heard the phrase.