I don't think being interested in the (ancestors') race of a co-worker is necessary racist. I worked with people with all kinds of cultural backgrounds and it might be just an interesting topic to talk about. If someone has family in Iran, Senegal or Indonesia that's definitely more interesting to me than a conversation about weather or last night's football game.

Personally when someone asks me where I'm from, I respond in order of:

A) if I'm in my home city, I tell them the province I grew up in (because I came from a small town I would never expect anyone to know, if it was a big city I'd say that.)

B) If I'm away from my home city in my home province, I tell them my home city.

C) if I'm away from my home province, I tell them my home province.

D) if I'm away from Canada I'll tell them I'm from Canada

E) if based on context it seems they're asking about my ethnic background, I tell them I'm some kind of western/northern European mutt.

Now obviously I'm white as hell and no accent, but OP is saying they're basically that as well, so I'm not sure why race would be the assumption for them either. I don't even know how I would respond if i asked someone at work where they're from and they answered Canada.

I think asking where someone is from is a pretty universal way to mean, “What ethnicity are you?”.

Usually, you can understand someone’s question based on the context. Your question, for example, “What race are you?” Is not specific enough. I could answer, “I’m not a race, I’m a person, but I enjoy competing in races.”

So just use context clues to understand a persons question and answer the question if you feel like it.