Key of D Major, C Major is the VII chord

Nope - VII of D major is C#dim.

The C in Ashcan Farewell doesn't really come out of any musical logic and certainly not out of Scottish tradition. I prefer leeneia's characterization - it's from Tin Pan Alley. For me it doesn't open a vista on a broad green valley, rather it suggests staring at the walls in a tiny cheap motel room with windows that face the back of a retread-tyres shop, nothing but Jim Reeves on the radio, nothing to read but a pile of Readers Digests and a Gideon Bible and a pervasive smell of rotting vinyl and stale cigarette ends.