Kolobok, as Hammer says the more opinions the better. I agree with what you say about DM's generally they should be the anonymous workhorse in the team, think Dunga for Brazil during the 90's.
A free role can occasionally work if you looking to set up moves from the back but you may need a decent defense or asolid contribution from the midfield to allow for the inevitable gaps that will occur sometimes. Good in a 4-5-1 maybe but must admit I havnt tried a DM with a free role in FM08.
As for my DM setting, firstly I'm playing Demy De Zeuw as a DM and he has excellent technical and mental stats so it might not work for everyone. I have him set up as a playmaker, with high creative freedom but not in a free role but I do have the hold up ball option ticked. Forward runs set to rarely and run with ball set to occasional.
I tend to play with medium closing down, passing one notch into direct and through balls regularly and adjust this depending on how the match is going. Likewise his mentality gets adjusted depending on how things are going. Generally this season he's getting ratings of 7 most of the time and weighing in with plenty of tackles and interceptions.
Nothing spectacular but he's doing his job leaving the rest of the midfield and the strikers to collect the headlines whilst he basks in the glory of his 'worst signing of the season' award.