Simple question:

If I make Erik the Slayer to my Steward, would that enable me to use him as a follower without having to pay for him?

Tried making him steward, you can't.

You can. New here but I had the same issue where he will repeat saying I can hire him for free.

Take him somewhere from the house. Dismiss him. Then wait about 24 in-game hours maybe a bit more and he should be fine.
Tried this on two of my 360 characters.

But also to answer the original question. No you will still need to pay him.