Could it be true?  Films which have fallen into the public domain or their copyright has expired can be downloaded and burnt to DVD legally.  Most of these are really old, like 50 years plus.  This is great news if you like old movies, some of them have great stories and are very interesting to watch.  Some How-To and instructional/ informational films are available for free legal download as well. Usually they are pointing to a product available for purchase, but still good info nevertheless.  Some film’s owners allow free distribution also, even though it may be a new work.  Certain political and other organizations may do this to help get their message out.  A word of caution though, sometimes it can be difficult to ascertain the public domain status of a movie, so some careful research must be done, particularly if you intend to distribute it.

This site here has a good selection, http://www.publicdomainflicks.com/ the movies are in mp4 or mpeg-2 which are quite big and cumbersome to download, but they look good.  You can even watch them live streaming.

Here are some more sources of films distributed for free:

Film schools

Film makers, short film projects