What program do I use to repaint and is there freeware versions?

There is a multitude of programs to use for repainting, however the really good ones all cost money.  I use JASC Paint Shop Pro, and am extremely please with it, as it is very good at layering (a must have for repainting aircraft).

It is possible to do it with Paint, but the quality is so wretched that its pointless.  I would recomend getting a free trial of some paint program or two and see what you prefer.  They are usually full programs with date limiters on them, so you won't be able to use them forever.

You will also need DXTBmp to convert some of the default aircraft (and some downloaded) textures into a paintable format.  I don't remember exactly where you get it, but someone else will surely be able to.