Performance free refers to a library music model in which the music which is sold has no PRO registration and therefore can not receive broadcast royalties (back end). I.e. even if a cue sheet were filed the track would not receive back end because it is not PRO registered.
Performance free libraries market to their customers as being completely free of all royalties and only accept composers with either a) no PRO affiliation or b) specific tracks outside PRO registration (while the same composer may have different tracks PRO registered). According to my understanding b) is technically against the Ts and Cs of some PROS, e.g. PRS in the UK.
What you mentioned – a track from an RF library with no cue sheet submitted – is something that probably happens much too often.. but it’s not performance free. It’s more like an accidentally s*** situation. If the composer chased it down and got a cue sheet filed, then provided it’s within a certain time limit (like a year or so I think) the composer could get paid the backend on such a usage.
I hope that explains it.