Q:

Will the word 'schadenfreude' be understood in an English text?

In the context of a creative work, can I use the word 'schadenfreude'? For example:

I experienced immense schadenfreude when my friend slipped on a banana peel.

Will it be understood by a general audience (perhaps not children, but the majority of adults)? If there is no equivalent word in English, is it acceptable to use words from other languages, or would the phrase be significantly better understood with the use of an English definition? Such as:

I experienced immense pleasure in the misfortune of others when my friend slipped on a banana peel.

To me, this is rather inelegant compared to the first.

A:

Yes, it is used in English and its usage has increased considerably in recent decades (see Ngram):
Schadenfreude: 

enjoyment obtained from the troubles of others.

(M-W)

The German loanword schadenfreude is a recent addition to the English language, but its meaning is so simple and its concept so universal that it’s probably going to stay. Plus, there is no corresponding English word. Simply defined, schadenfreude is pleasure derived from others’ misfortune. It is most often used in reference to the misfortunes of someone who is privileged or has been exceptionally fortunate in the past, but it doesn’t have to be used this way.
Like most newly arrived loanwords, schadenfreude is often italicized, and many writers still feel the need to define it or introduce it by remarking how funny it is that Germans actually have a word for this—for example:

Only if you are afflicted with schadenfreude—that is, if you yield to the temptation to take pleasure in the troubles of others—will you be pleased to know that every penny of that $180 million is now in jeopardy. [Chicago Reader]

(The Grammarist)
Etymology:

"malicious joy in the misfortunes of others," 1922, German Schadenfreude, literally "damage-joy," from schaden "damage, harm, injury" (see scathe) + freude, from Old High German frewida "joy," from fro "happy," literally "hopping for joy," from Proto-Germanic *frawa- (see frolic).
  
  
What a fearful thing is it that any language should have a word expressive of the pleasure which men feel at the calamities of others; for the existence of the word bears testimony to the existence of the thing. And yet in more than one such a word is found. ... In the Greek epikhairekakia, in the German, 'Schadenfreude.' [Richard C. Trench, "On the Study of Words," 1852] 

(Etymonline)
From A Joyful & Malicious History Of ‘Schadenfreude’
by Jane Hu

In an interview with Martha Stewart shortly before her 2003 indictment, Jeffrey Toobin asked the visibly exhausted celebrity if she felt herself the victim of “schadenfreude.” He didn’t expand upon the Germanism, and Stewart certainly didn’t need it defined.

Schadenfreude? I asked. “That’s the word,” she said. “I hear that, like, every day.” And she added, in her precise way, “Do you know how to spell it?” 

While spelling the thing might be an issue, writers assume nowadays that when they say “schadenfreude,” readers know exactly what they mean. 
It’s defined as the “malicious enjoyment of the misfortunes of others” in the OED, which first included the word in 1982. 
   The online OED traces key appearances of “schadenfreude” in English publications, the earliest of which is found in philologist Richard Chenevix Trench’s 1852 meditation on language, Study of Words.

A:

No.
The question specifically asks whether the general readership will understand it.

"the majority of adults"

The answers claiming "yes" have given no evidence of general adoption.  They have only shown that the word has entered the lexicon.  The NGram offered in another answer shows miniscule usage.  
Unfortunately, proving what the "general" readership will understand is a rather difficult task to do precisely, so this answer can be cut down for "lack of research", but to try to counter that, I asked the first ten people I met in my work day - and I work in a well educated space.  Only one of them knew.  That doesn't seem "general" to me.  It's certainly not the majority of adults in that small sample space.
I suspect that the answers in the positive come from people who knew.  Unsuprisingly, readers of this stack exchange have good vocabulary, and it is common to think of ourselves as typical, hence extrapolate our understanding of a word to "general understanding".

A:

Your question has a couple of parts:

Will it be understood by a general audience (perhaps not children, but
  the majority of adults)?

The, mostly anacdotal evidence here suggests not.

If there is no equivalent word in English, is it acceptable to use
  words from other languages

I would suggest either "sadistic pleasure", "guilty glee" or smugness as roughly equivalent phrases or words that are not to clumsy but provide much of the same meaning. However, English has always been a language with many loan words from other languages and I would judge that many of those have been introduced through works of fiction or other creative works.
and

would the phrase be significantly better understood with the use of an
  English definition?

I wouldn't go for a formal definition but possibly as an aside such as:

"I experienced immense schadenfreude, (as a German would describe my
  somewhat sadistic pleasure), when my, usually so graceful, friend
  slipped on a banana peel."

