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.