Good job reading the FSF website. That will have most of the answers you're looking for. Specifically here http://www.gnu.org/philosophies
I think you're confusing terms without realizing it. It sounds to me you are talking about three distinct things.
Free Software as in freedom.
Open source software.
Free software as in doesn't cost anything.
I will briefly explain these three. None of these are mutually exclusive. A project can be any combination of these three things. If you have more question feel free to ask.
Free Software (freedom): Free Software, as defined by the Free Software Foundation has the four following necessary conditions:
* The freedom to run the program, for any purpose (freedom 0).
* The freedom to study how the program works, and adapt it to your needs (freedom 1). Access to the source code is a precondition for this.
* The freedom to redistribute copies so you can help your neighbor (freedom 2).
* The freedom to improve the program, and release your improvements to the public, so that the whole community benefits (freedom 3). Access to the source code is a precondition for this.
Notice there is nothing there about price. If you garuntee these four freedoms while still charging for software you have Free Software. For a full explanation of what free software is check out this link: http://www.gnu.org/philosophy/free-sw.html
Open Source: Open Source is a concept started by another organization after the FSF was established. The goals of OSS (open source software) is to have a better development model. To reiterate. OSS is about better software, not freedom for the user. In this important fact it differs from Free Software. Most software that is Free Software also happens to be OSS, and most OSS also happens to be Free Software. Sometimes by design and sometimes by accident. The organization behind OSS is OSI http://www.opensource.org/
Free software (no cost): This is a confusing term and should probably be avoided. Instead say something like no cost. But essentially it means there is no charge for the software. Lots of Free Software (as in freedom) is also distributed at no cost. Same goes for OSS. But no cost software doesn't need to be Free Software nor OSS, but and vis versa.
If I were you , I would choose a license and distribution method that encompasses all three of these ideas. I think the GPLv3 and later is a well suited license for such a task and my preferred one.