Ken-
1. The admonition that your life may depend upon the anchor system's is a generalized one that covers a lot of ground, and certainly applies to those boating is situations where the use of an anchor after a motor failure can keep one out of the surf and off the rocks, and also applies to those anchoring overnight or during storm conditions in situations where dragging anchor could put you aground or out in shipping lanes or similar situations. For those of us on inland lakes, the hazards are less.
2. If the windlass is jamming tight upon retrieval, you may have a clutch problem, but the very best way to deal with this is to call or email the Tech Rep from Simpson Lawrence, as he is specifically familiar with the workings of the winch you have and deals with such problems daily. In general, when having problems with a piece of equipment, the manufacturer's Technical Representatives offer the best advice available beyond those simple fixes that we can deal with here. They're paid to do their job out of the purchase price of the equipment you bought, let them earn their pay.
3. The Free Fall feature works best with a rope chain combination rode, where the big weight is on the end with the anchor and the chain, and the rope stops pulling hard once the former is on the bottom. An all chain rode pulls down until it empties the entire locker. You'll have to use the power down mode instead, unless you want to change the rode to a combination set up.
I have 100 feet of chain up front followed by 150 feet of rope, and like it just fine. All chain is very workable in specific applications. I like it in inland lakes and shallow bays and rivers. It doesn't let the boat wander with the relative short scope that you can use, and has a definite quieting effect on how the boat rides at anchor because of it's weight. It is not suitable for large waves and swells, cannot be used in really deep water, and doesn't have much elasticity, although the weight of the horizontal part provides some deadening as it is lifted and dropped. I also have a second set up to be switched out when needed with the one above which is 20 feet of chain and 200 feet of rope.
Here's an analogy to the motorcycle world for thought:
There are as many different types of bottoms to anchor to as there are surfaces to ride a bike on, and as many different types of anchors as there are motorcycles. You wouldn't ride your Honda GoldWing on a motocross course, or take your dirt bike on a three month nation wide tour. Why expect that one anchor and rode can safely hook you into anything you can position your boat over and ride out any storm?
Worldwide cruisers carry a variety of anchors and rodes for different conditions. We have to consider ourselves lucky if we can find one set up that works reasonably well in most of the conditions we encounter with our C-Dorys.
Hook 'em up with whatever works for you! Joe.