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There's no indicator because free spells are of any spell level you can cast. At first level, you get 1st level spells equal to 3 plus your intelligence modifier. At 2nd and 3rd level, you'll get two more free 1st level spells. At 4th level, you can choose your free spells from 1st or 2nd level spells, etc.
There seems to be a bug. I'm seeing the same thing you do—an error to add free spells, then an error that you have too many. You should file a bug report.
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