The notches in the rail are pretty common, the reason why I put a lite coat of copper grease on the rails when doing a service. I sometimes dress the rails a little with a file, though i try to remove as little material as possible, just the crust.
The squeel can be helped some with a brake paste for the back of the pads (sound deadening, anti vibration). One product form Loc Tite I've found to be lacking a bit (stuff never seemed to help much) is the brake pad paste they offer. There is another silicon (RTV type) brake paste (I've gotten packaged with the new pads on occasion), with the consistancy of contact cement, that has good sound deading properties, but I forget the name. Copper foil and teflon sheets are sometimes used.
If you have riveted pads and the rivets have come loose, no amount of paste or whatever is going to help. Using a rivet punch to tighten them up is an iffy thing, the pads can be cracked if it is over done.
Not many manufacturers offer it anymore, but pads that are both bonded and riveted, offer the best service. The dependability of the rivets and the heat dissapation. With less chance of harmonics from a bonded pad.