Is it possible to set free fit instead of close fit as default when inserting a standard hole.

I think it lists alphabetic.  If you know how to change the filenames, or one of the parameters in the file, and have the Creo-Index-Gremlins recognize the change, you might be able to do what you want.  This is probably a weighing of pain factor but a good question none the less.

You could also just change your hole files templates so that close fit has the diameter you want. Note that any legacy holes that are redefined will be updated once they get redefined (but not before).