Right here on MobileRead is a good start -- the ebooks are built by hand by MobileRead members, and in my opinion they have the best formatting. There are a lot of other good ebook sites out there. Here's my personal free ebook source list:
Public Domain
MobileRead - best formatting, limited selection
ManyBooks - PG scraper, but sometimes has books from other sources, good formatting
Feedbooks - mostly scrapes PG, improves formatting
Project Gutenberg - the granddaddy of them all, phenomenal selection
Munseys - painful to use, but has books nobody else does
the Internet Archive - generally only the scans are readable
Google Books - most of the time, what's good isn't free, and what's free isn't good
(note: if you have not seen Google's logo today,
GO LOOK. It's playable.
Free non-PD
Baen Free Library - amazing selection; also, they
will tempt you into buying books
5th Imperium - Baen CD collections
Other Things
Search:
Inkmesh. Sadly, it's not a very comprehensive search engine - it misses a lot - but as far as I know, it's the only ebook-specific one out there.
If you're using free ebooks, it's only right to give something back: proofread a page a day at the
Distributed Proofreading Project.
P.S.
I almost forgot: get
calibre. Its support forum is a few boards down from here.