I am thinking of using Unity\'s free version. Does anyone know if it comes with full source code?
Also, what are the licenses like (how flexible compare to Torque engine
I think it's worth adding that now Unity Indie is free! It does not come with the source code. The licence comparison page is here.
You should find this blog post highly useful: http://blogs.unity3d.com/2009/03/20/why-you-probably-dont-need-a-source-code-license/
See the Unity license chart.
Unity does not comes with full source. You can request a source license, but the price is negotiated I believe. See bottom of page - https://store.unity3d.com/shop/
I have used both Unity and Torque and find Unity to be much more accessible. While Torque comes with full source, the design, resources, and overall support is lacking with GarageGames. My advice is to choose Unity3D.