Thank you to everyone for the responses. I went ahead and adjusted the trailer brakes like in the video that Tiger02 posted and that worked good enough to pass the inspection. There is still some squealing, although not as bad. I will get that taken care of next spring. As far as who did the inspection; each DMV in DE has an inspection pit that you have to drive all roadworthy vehicles through prior to going inside the actual DMV with passing inspection results that they print out for you. I'm not sure how the brake inspection is completed but I know that when I jam on the brakes both the truck and trailer are over a set of grates that somehow measure the breaking force of each wheel.
Once again, thanks to everyone who replied. This was very helpful and kept my wife nice and happy which was actually my biggest concern, haha. --Jerry