Bought a Godaddy doman and redirected & masked it (301) to a temporal free hosting site(freehostingeu), the redirection and masking works perfectly but the URL of the various pages in my server's folder doesn't show in the nav bar when I click a link that sends me to that page.
It's because the GoDaddy redirect isnt a "real" redirect. It will just generate a file with frames and loads the target URL into that frame.
Thats why your URL at the top doesn't change. Look at the HTML source code and you will find the frameset.