I am not sure what your knowledge regarding this subject is, but what we were conversing about was the fact that a universal touring machine operated on itself often attempts to trace it's own computations. Combine this with a preprocessor that copies input, and give the composite machine it's own encoding and you have an infinite regress.
So you are repeatedly referring to this trivial notion that the halting machine is supposed to be able to operate on itself in the setup the "proof" provides. This doesn't do or mean anything signifigant. You could make halting algorithms and machines all day long and they just wouldn't be able to operate on themselves. This scenario is not what the halting proof is aiming for. The author wants to be able to say that the halting problem is undecidable the power set of Touring Machines, or just undecidable period.
Because the entire purpose of a Halting Machine would be to ask the question "What does Machine M do with input R", tracing computations can be considered to be part of it's definition (although it may not be possible to prove this using the language of mathematics)
If a Halting Machine traces computations by definition, Touring's proof is utterly trivial and says nothing about the ability to create halting algorithms in general.
The scheduler you mentioned is not an algorithm that can tell if the code is going to halt, because it would use inductive reasoning instead of deductive reasoning. IE it runs it, watches what happens, and then could record the results if it chose to. This is a different subject.
The halting problem involves deductively reasoning based on the form of the code to see if it is going to halt or not. It can use things that look like inductive reasoning, only if it can also be represented with deductive reasoning (like mathematical induction). This is why the scheduler is not a counterexample to the halting problem. It solves the "Does the machine halt by the kth transition problem" And then guesses that if it doesn't it probably won't halt at all.
There is no proof that an algorithm cannot exist to solve the halting problem - only that the algorithm couldn't function on itself in the setup Touring created for his "proof".