There are two phrases in the code with "freerotation" in them:
ThirdPersonLara>
<FreeRotation>
<camsetting name="SpringLength" value=".01" />
<camsetting name="SpringCoefficient" value="3.5" />
<camsetting name="DampeningCoefficient" value=".25" />
<camsetting name="MaxCameraDistance" value="16" /> <camsetting name="MinCameraDistance" value="2" />
<camsetting name="StartingPitch" value="-1"
and
FreeRotation>
<DistanceClipping>
<camsetting name="Adaptive" value="off" />
<camsetting name="Dist" value="200" /> <camsetting name="MinFPS" value="20" />
<camsetting name="MaxFPS" value="30" />
<camsetting name="MinDist" value="30" />
</DistanceClipping>
I am assuming that The latter is the real Free Rotation and the former is Dynamic Follow (or the other third person i can't figure out what thirdpersonm64 is).
Might try changing the "Dist" value in the Free Rotation instead of Dynamic