Hi R Brahamankar,
I have checked both the Item category and the schedule line category. In both cases the schedule line allowed tick is appearing .
After that i again created a Sales order for Free Goods ( FDO Order Type ) . In that I noticed that the Storage location filed is Blank.
I think this might be the problem.
If the Storage location filed is updating when the creation of the Sales order this issue might not happen.
Regards
Nirmal