I checked that the type address my pension agency has is U.S. address. Why does this "free file" form block me from moving on with red -font note "Needs Info" ???

If you received a Form 1099-R from a US based provider then the address on the form will be a US address.

Try this -

Delete the Form 1099-R and then re-enter the form manually -

 

To enter, edit or delete a form 1099-R -

• Click on Federal Taxes (Personal using Home and Business)
• Click on Wages and Income (Personal Income using Home and Business)
• Click on I'll choose what I work on (if shown)
• Scroll down to Retirement Plans and Social Security
• On IRA, 401(k), Pension Plan Withdrawals (1099-R), click the start or update button

Or enter 1099-r in the Search box located in the upper right of the program screen. Click on Jump to 1099-R