I suspect B&N is shy about stuffing anything into customer libraries after an early uproar when they did this. I believe they "gave" everybody a cookbook, and it was not well received.
You can obtain plenty of free ebooks, either via B&N directly (search for $0.00, and be prepared for a lot of erotica), or by sideloading free ebooks from other sources. Have no fear, there are plenty of free ebooks to be had.
There is a free Nook app called Books Buddy. first category I see is Book Offers which are all free. It's nice because is gives details a reviews of the books. It is updated frequently.
It seems everyone, I've seen reveiwing book buddy, is extolling it's virtues, but I don't see it! I don't find that it updates enough, and it's sure not an exhaustive list of the freebies offered by B&N, plus there aren't any covers. But, I guess it's better than nothing, and hey, it's free!
Thanks for everyone replies. The weird thing is that most of the free books (including the infamous cook book) showed up when my sister made her first book purchase. Selection was a little different than on my Nook, but finally appeared.