I went with "est-ce qu'il gratuit". Why wouldn't that be allowed?
Because it doesn't mean anything, there is no such verb as "gratuit".
Word for word it says "is it that he free", which is equivalent to "he free".
Is this a difference between spoken and written french?
According to grammar I would think it would be "Il est gratuit" (or elle est gratuite), but spoken french seems to use c'est more for it is.
In this case there is no difference between spoken and written French. "Il est gratuit" (usually) means "He is free (of charge)".
Il est gratuit is accepted, but is il est gratuit or c'est gratuit more common in france?
I believe it would depend on what kind of item the freebie was.
i said "cela est gratuite" why isn't it good
It means "that is free" (or "this is free"). Even as a question it would mean "Is that/this free?".