Schmeichel was part of the last United side to win the tournament at Wembley in 1999, the second part of that fabulous Treble, after which the Denmark keeper quit for a short stint with Sporting Lisbon.
He left behind a massive controversy as the Red Devils - as European Cup winners - were invited to the first Club World Championship in Brazil by FIFA, a tournament that clashed directly with the FA Cup third round.
United felt it was impossible to fulfil fixtures in both competitions at the same time, and with the FA desperate for Sir Alex Ferguson and his team to represent England in Brazil and curry favour ahead of the 2006 World Cup host vote, the Old Trafford outfit backed out of the world's oldest cup competition.
Looking back, Schmeichel believes it was a big mistake and contributed massively to the shine being taken off the competition.
Speaking to promote 'Dancing with United' on behalf of the Manchester United Foundation, Schmeichel said: "The FA made a massive mistake not letting United sit out the third round when they went to Brazil.
"That would have made everything easy.
"But by leaving the European champions and defending FA Cup winners out of the competition the FA degraded the FA Cup.
"Clubs started to think about the FA Cup in a different way and play their reserves and younger players."
Allowing United a bye into the fifth round was one of the proposals put forward by then Red Devils chief executive Martin Edwards.
When that was rejected by the tournament committee, withdrawal was the only option given Ferguson had ruled out the option of picking a team made up of youth players, fearful of the damage to their careers should United be drawn against Arsenal or Chelsea, who subsequently went on to win the competition.
Only now does Schmeichel feel the competition has got its lustre back.
But he accepts it will never challenge the dominance of the Champions League.
"One of my greatest lifetime ambitions, from being a small kid, was to play in an FA Cup final for Manchester United, at Wembley, and win it," he said.
"I didn't think about winning the English championship. It was the FA Cup final.
"I don't think many players are dreaming that dream any more.
"The FA Cup went through a very tough period, but now it is back and Manchester United have an important game in it against Fulham on Saturday."
There are still problems for the FA though, including the knowledge that should either United, Chelsea, Liverpool or Tottenham draw at the weekend, their fourth-round replays will be held on the weekend of the fifth round as there is no alternative space in the calendar.
However, Schmeichel has more pressing issues to address, namely getting in shape for 'Dancing with United', the club's version of Strictly Come Dancing.
Former United wide-man Quinton Fortune has also confirmed his entrance, whilst Ulrika Jonsson is the latest celebrity to sign up, joining Coronation Street duo Antony Cotton and Jennie McAlpine and Schmeichel's intended partner Camilla Dallerup.
In addition, Gary Neville will be one of the judges, a role he has received such grief for following his damning analysis of David de Gea's performance at Tottenham on Sunday.
"Gary has gone from being one of the world's best full-backs to becoming a fantastic broadcaster," said Schmeichel.
"He has learned to project himself, and that is what judging is all about.
"I have no idea how much he knows of dancing but, knowing Gary, I am sure he will prepare properly, probably watching the last five series' of Strictly Come Dancing.
"I expect him to deliver his opinions with a flourish, probably like Bruno (Tonioli)."
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