You seem to be confusing "free font" with some sketchy site allowing you to download [something] for free. This is like assuming some music album is free because you found a torrent for it. If you want to know if Monotype's Gill Sans is free, then you ask Monotype, not "FontPalace." It's very much not. If you want to use Monotype fonts for web embedding, they offer it as a service, with separate licensing. You'll find it as a tab at top of the site, and also down by the previews for the particular font, if it's offered.
This isn't a question of you paying for the font or not; some foundries just disallow conversion/embedding, period. FontSquirrel will know to reject it because the foundry got in touch with the developer and told him to blacklist it, regardless of you having a license. If you go read your license, you'll probably find you're not allowed to convert or embed, etc. That's assuming a legitimate copy. Whatever it is FontPalace is offering, you're on your own figuring out what to do with.
As a sidenote, commercial fonts offered by sites like FontPalace are often corrupted, modified, incomplete or otherwise screwed up. Beyond any questions of legality, you don't really know what you're getting, and have no one to go to for support.
