In the freehostia wordpress setup, I would remove the /wordpress part of the URL. Not needed.
Once you finish installing Wordpress on Freehostia, you need to log in to your wordpress.com install, and EXPORT all the content of your existing blog (Tools - Import/Export). Save the export somewhere on your computer.
Then log into your Freehostia wordpress install, again go to Tools-Import/Export and IMPORT the file from your computer.
You might have to install an importer plug-in to do this (Wordpress will tell you if this is the case).
Then you can install any plugins you want.