You are making things too complicated for yourself. Let $A = K_1 \times \dots \times K_n$ be a finite direct product of fields. You can verify quite directly that every $A$-module has the form
$$V_1 \oplus \dots \oplus V_n$$
where each $V_i$ is a $K_i$-vector space. These modules are always projective, but they are free iff each $V_i$ has the same dimension.
Edit: Here are some more details as a series of exercises.
Let $R, S$ be two rings and let $M$ be an $R \times S$-module. Let $e_R = (1, 0), e_S = (0, 1) \in R \times S$. Show that $e_R M$ is an $R$-module, $e_S M$ is an $S$-module, and $M = e_R M \oplus e_S M$ as $R \times S$-modules, where $R \times S$ acts via the projection onto $R$ on the first factor and via the projection onto $S$ on the second factor.
Generalize the previous exercise to a finite product $R_1 \times \dots \times R_n$.
Now consider a finite product $A = K_1 \times \dots \times K_n$ of fields. In terms of the above decomposition, what does the free $A$-module on a set $X$ look like?
The error, as rschwieb says, is that finite direct products are not an example of a direct limit, so the linked post about direct limits of local rings is irrelevant. $K_1 \times \dots \times K_n$ is never local for $n \ge 2$, and in fact has exactly $n$ maximal ideals, one for each factor. Geometrically $\text{Spec } K_1 \times \dots \times K_n$ is the disjoint union of $n$ points $\text{Spec } K_1 \sqcup \dots \sqcup \text{Spec } K_n$, and modules break up into modules corresponding to each of these points, which is a simple way of thinking about the above decomposition.
This is also an excellent advertisement for deprecating the terminology "direct limit" because, contrary to the name, direct limits are a colimit (while products are a genuine limit), in modern terminology. The modern term should be "directed colimit."