This is what I found (and added a few steel glossaries to my collection :-)),
though it also talks about adding other components.

From the first site below:
The production of free cutting steels The major use of Ferrous Sulphide in lump form is as a re-sulphurizing agent in the production of carbon, alloy and stainless types of free cutting steels. The normal sulphur content in these steels is 0.18% to 0.20% and the additions of Ferrous Sulphide has the effect of improving the machining properties of steels used for continuous manufacture of such products as nuts and bolts and other mass production steel components.


From the second site:
FREE CUTTING STEELS:
The free cutting steels contain sulphur and phosphorus. These steels have higher sulphur contents than other carbon steels. In general, the carbon content of such steels vary from 0.1% to 0.45% and sulphur from 0.08% to 0.3%. These steels are used where rapid machining is the prime requirement.

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Note added at 2002-03-07 14:31:04 (GMT)
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Make that \"free-cutting steel\" (with a space or dash) and you will find a thousand google hits.