well the co2 is needed for photosynthesis if you only have plants in the tank, might be needed. but since youll have fish, and fish produce co2, you dont need that
its been awhile since i had a underground filter so i dont know what would be better. the hang on filter defiantly be be more then, especially being that your fish are on the smaller side. just do a gravel vac to clean the gravel out. screw it, if you have them both on hand, use them both. the more filtration the better.
i have a 35 gallon hexagon tank setup (which is much more tall then wide) and i use a normal 10 gallon light, it works perfect so you dont need any special lighting.
and last if you drop some of the larger fish you could put a ton of small fish in there. but i would only get one angel fish, they can get about 6 inches but dont produce nearly as much waste as chichlids. ive never had groumies, but dont they get pretty big? maybe they are a bad idea. id get a 2nd opinion on that one. ive seen monsters.... the neons, glo's and ghostshrimp are all tiny you could have a pretty decent amount in there. definitely drop the pleco, they are gonna get too big. check out the hillstream loach( also called a stingray pleco but its not a pleco...or a stingray) or those small algae eater things (they are called oct-something i cant remember) for algae control. and for the catfish, make sure they dont get too big. stick with a cory of some sort.