Is Quake II free now?
Solution 1:
While id has open-sourced the engine, the game itself is not free (as in beer or speech).
All of the Q2 data files remain copyrighted and licensed under the original terms, so you cannot redistribute data from the original game, but if you do a true total conversion, you can create a standalone game based on this code.
This essentially means that you can download the source code, and use it as long as you comply with the terms of the license. Additionally, you can download versions of the Q2 binaries/source that other people have modified or made available, if you so desire. If you want to play the game, you'll need the game files from the original disc or some other source.
As far as the game is concerned, you can pick it up on Steam, along with most of the rest of the id library.
Solution 2:
Quake 2's engine has been released as an open source product. The best proof of this I can find is the id Software public git repository. The actual game content however has not and you still need to buy a copy from steam if you want to play it.
The source code can also be found zipped on id Software's FTP site here.
This link on slashdot points to the original id Software page, which has been updated since but which also point to the git repository.