If you "upgrade" your account to PAYG you will not have this limitation. The "no free instances available" issue is only for accounts without a payment method.
I got this confirmed with a salesperson ~2yrs ago when I first set up my free tier on there.
Can confirm. I opened a new account and could never get any ARM instances in Ashburn region (capacity error). Signed up for PAYG (took a day - who knows why) and now no capacity problems.
> took a day - who knows why
I bet they want to see the test payment work it's way through the system, which given the number of midnight batch jobs that still exist in banks means waiting a day.
It's only a preauth payment. It doesn't settle.