I have just developed a wordpress theme based on some popular free theme available on the internet and send it for footer link auction. One user of the same forums site has replied with stolen design. I agree this design is totally inspired by the that user's design but i have included a lots of new feature in this new theme. Do you think it would be still considered as a stolen design or i can claim it my theme. Kindly guide me in this matter.
It's possible you are guilty of copyright infringement. If it is visually very close to the original, it could be derivative copy, which is infringement. You can't take a design and make slight changes and call it your own.
Thank you very much for your kind guidance, One more question, How it is if i let the users download it free of cost from my website
You need their permission. Free does not mean you can automatically take it and redistribute it on your website.