Fences 3 is only free if you bought Fences 2 within 90 days of the release of Fences 3. Otherwise Fences 2 users can upgrade to Fences 3 for $5, see the link "Own Fences 2?" at the bottom of this page:
https://www.stardock.com/products/fences/download.asp
If you want to stay with Fences 2 at this point, you would uninstall Fences 3, reboot, reinstall Fences 2 and activate it. You would probably want to take snapshots and back them up first, if you have them backed up from immediately before you installed Fences 3 that would probably be better.