1. What is a reasonably decent free program to deal with this, I have heard of a few but for some reason their names escape me at this time.
There's Blender but as was already mentioned getting animations in and out of Blender is an issue but not impossible -> generally you need to use Holograms CMDHKX program to convert HKX animations to KF then import them into Blender and once done export to FO3 KF format and use CMDHKX to convert it back to HKX for use in Skyrim -> but this is not without issues as i will mention in another question below.
Note: Personally I could not get paid enough money to use Blender for anything as its UI is complete garbage !!!
Another Free program is GMax its basically a stripped down 3DSMax 6 and from a useable standpoint the Max exporters have a GMax version that works far far far better then the Blender versions ever have, the down side to promoting this option is I have not tested Holograms updates on the GMax version and have no idea if they are 100% functioning.
Then there is 3DSMax which is free if your a student that has a great UI and its extremely configurable if its not to your liking you can even get it to work like Blenders s**t UI if you wanted (though that is unimaginable anyone would do something so blasphemous), and its Exporters have been updated to deal with most Skyrim exports.
2. How easily would I be able to re use pre-exsisting animations in a place they aren't currently being used.
Not sure what you want here but almost any animation already present can be called to play through script you just need to make sure the actor is in the correct state for that anim, for instance any combat anim REQUIRES the actor be in a combat stance or you risk screwing up the actor's current state and this will lead to a broken actor that you have to force reset -> through script.
3. How challenging is it to attatch sounds to animations (as the wolf has panting attached to its idle)
Sounds require Annotations which ONLY Max/Maya/XSI can export as they are the only platforms that have the HCT Exporter available to them.
And this leads to your issue when using both Blender or GMax as Holograms Converter completely strips Annotations out of HKX anims when it converts them to kf and it will NOT create Annotations from Sequence Tags present in the Kf's, so basically your up the creek for this one using both of those Free Options.
On the other hand if your calling animations to play through script you can also call sounds to play through script so that problem kinda works itself out if that is all you wanted to do.
You can also edit the Behavior Files to add Annotations though unless your really schooled in the Behavior Format tinkering around with them in xml format is not recomended.
Given my total lack of skill, I will probably have to spill the beans at some point in development as to what I am working on, but till then I am keeping my mouth shut.

Lack of skill is the only reason to try anything new !
