First, you're using the wrong version of "correct". I used it in the sense of "fixing", not the sense of "proper". Context should have told you that.
Second, it's not a meaningless distinction. Government is not inherently part of the economic market. The fact that it enforces rights and contracts does not make it part of the market, it only makes it part of the framework. It's only when people pull it into the market by having it regulate specific things that it becomes a distorting effect on the market.
Third, having a perfectly free market does not imply a perfect market. It only implies a potentially perfect market and/or an optimally efficient one (which is not the same thing). Because the market is made up of people, it can never be perfect, no matter what you do, but the perfectly free market will be the best that we can theoretically do.
Re: Note to the economically ignorant:
Second, it's not a meaningless distinction. Government is not inherently part of the economic market. The fact that it enforces rights and contracts does not make it part of the market, it only makes it part of the framework. It's only when people pull it into the market by having it regulate specific things that it becomes a distorting effect on the market.
Third, having a perfectly free market does not imply a perfect market. It only implies a potentially perfect market and/or an optimally efficient one (which is not the same thing). Because the market is made up of people, it can never be perfect, no matter what you do, but the perfectly free market will be the best that we can theoretically do.