Good thing you're taller. It should not be hard at all to build muscle on a frame like that! Okay, so that's fine, I understand that. Drinking water in general will actually cause you to lose weight (I forget exactly how, water is wonderful). Peanuts are a good choice. As long as you're not eating a can a day, it's fine. They have certain oils and proteins that make you feel more satisfied.
You might actually stop losing weight at around 230-250, depending on how much muscle you want to build versus just losing weight.
Walking is indeed a great way to do it. You'll feel sore, of course, but you'll get used to it. I am a high school track runner, but I'm pretty big, so I get shin splints, painful. I run though, not walk.
You should consider doing weight work if you have the time. Actually, walking and weight lifting both take lots of time.
EDIT:
Try biking, if you can.
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-Phil
"Since one of my brake light bulbs just went out, the forum told me that my piston rings are about to blow."
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