Is Vanilla Enhanced Textures free?

Yes. Vanilla Enhanced Textures is released under Community / Open Source and costs nothing. Neither it nor The Elder Scrolls II: Daggerfall has any paid content.

What do I need to run Vanilla Enhanced Textures?

The Elder Scrolls II: Daggerfall, which is itself free. Vanilla Enhanced Textures is an add-on and will not run standalone.

How do I install Vanilla Enhanced Textures?

The PlayBound Launcher installs it in one click from The Elder Scrolls II: Daggerfall's mods list. You can also install it by hand — full steps are on this page.