Make sure you are using our Cart buttons to take orders for your free product, as those will allow a Free Checkout in our shopping cart when the buyer's order total is 0.00:
If you're using a Buy Now button, that bypasses our shopping cart to take buyers directly to instant checkout with a predetermined payment service (e.g. PayPal), so in that case we don't have a chance to change the checkout method based on the order total, and of course PayPal et al. can't handle a checkout where no actual payment is being made.
