OK, no. You're right. Technically it's not free. The console still costs $500 and I still paid $500, albeit with money I made from selling property I own. It's not like Gamestop offered me a free Xbox One for being a nice guy.
In my case I feel like it is awfully close to free, however, admittedly due to details I didn't disclose earlier. All of the hardware I traded in, which constituted the bulk of the credit I received, was originally gifted to me from various parties and for various reasons. I paid nothing for that equipment and therefore traded it in for 100% profit (in the form of store credit). The games I traded I paid for myself, and an argument could be made that trading them in netted me less-than-ideal value for them, but I think GameStop's 50% bonus coupons narrowed that gap significantly.
And as tbassett said, it's hard to ignore the convenience factor of just walking into GameStop and unloading a bunch of crap. No shipping, no selling fees, no driving to Wal-Mart parking lots to meet people, no screwing around.
In the end, this was about as painless a mechanism for purchasing a console as I can imagine. Technically not free, no. But emotionally equivalent in my mind.