I found this awesome website via Boing Boing: Eztakes (links directly to their free stuff section)
This amazing website offers free legal movies for direct download or to watch as streaming video!
There are a lot of bad and very bad movies there (e.g. "Santa Claus Conquers the martians")... There are some classics (e.g. "Call of the wild" with Charlton Heston)... A lot of old movies (a lot of Buster Keaton for isntance)... Some rarities... Some cult films... And some jewels too!
Essentially it's a very eclectic mix of stuff...Especially in the free section. That said, it's worth taking a look at all their stuff, even the stuff that isn't available for free tends to be priced reasonably. For example, Charlie Chaplin's "The kid" is only 4$.