We are probably allowed to use audio software like LMMS right? If I'm wrong on that someone correct me.

But my main question is services like Freesound. You Probably can't just Drag and drop audio that someone else created right?

Then finally is the kind of sounds that are ok to use. Like if I were to download more instrument sounds for this Jam would that be ok?

The first category is absolutely allowed and encouraged - using lmms. 

No u can't use free sound as they are already made assets. 

U can download instruments to add in lmms or FL studio but u might not download and use instrumental music.