use of JR Pass & Hakone Free Pass

Do I understand it correct? - I might use JR PASS for both Shinjuku - Hakone (besides:is it HakoneYUMOTO?) per Odakyu Ltd.Exp. OR for Tokyo - Odawara (shink..) & THEN I BUY HAKONE FREE PASS FOR USE OF EVERY transport within the AREA OF HAKONE (i.e. shipS, ROPEWAYS, Tozan Railway ETC.)?
Could I buy Hakone free Pass for discounted price in both Odawara & Hakone Yumoto? Since there was some wrong assumption do not hesitate to correct and/or explain!
thanks in advance

use JR PASS for both Shinjuku - Hakone (besides:is it HakoneYUMOTO?)

The Japan Rail Pass is valid only on JR trains. The closest JR station to Hakone is Odawara Station. So, you will be able to use your Japan Rail Pass to go from Tokyo to Odawara byt JR trains (i.e. Tokaido Shinkansen or Tokaido Main Line, but not Odakyu Line).

At Odawara you can buy the Hakone Free Pass and use it from there.

More details are explained on the following page with map:
http://www.japan-guide.com/e/e2358_008.html

Could I buy Hakone free Pass for discounted price in both Odawara & Hakone Yumoto?

Are you referring to the current special discount on Hakone Free Pass which applies through September 2009? If yes, that discount does only apply to the Hakone Free Pass that includes the round trip between Tokyo and Hakone. I am pretty sure that it is only available in Tokyo.

The regular Hakone Free Pass, however, can be purchased at both, Odawara and Hakone-Yumoto Stations.

- You can take JR train to Odawara, then buy the discounted Hakone Free Pass for other transport insie the Hakone area.
OR,
- you buy the full-fare Hakone Free Pass from Shinjuku, meaning inclusive of Odakyu Limited Express ride Shinjuku - Hakone Yumoto.

Note that Odakyu line from Shinjuku - Hakone Yumoto is not covered by JR Pass. If you have a JR Pass anyway, then I would take JR to Odawara.