By use of constant energy molecular dynamics simulations, we have investigated the melting and freezing transitions in a two-dimensional system consisting of a constant density of classical particles interacting with a repulsive screened Coulomb (Yukawa) potential. In particular, we have investigated the role of an incommensurate substrate corrugation potential of sixfold symmetry on these transitions by probing the temperature dependence of the bond orientational order parameter (ψ6) and the corresponding susceptibility (χ6). Other physical quantities such as energy, diffusion constant, and the density of local topological defects have been monitored through the transition region. In the absence of a corrugation potential the system shows a sharp melting transition. In the presence of a corrugation potential the transition temperature increases and the transition becomes smoother. In contrast to the corrugation-free case we find a broad peak in χ6 above the transition temperature. We interpret this behavior in terms of the melting of a domain-wall solid. The detailed nature of this smooth transition depends on the degree of incommensurability. Relevance of these results to stage-2 graphite intercalation compounds is discussed. © 1992 The American Physical Society.