The correct answer is option 1, Azotobacter.

Azotobacter is a freeliving bacterium that plays an important role in nitrogen fixation in the soil. Nitrogen fixation is the process by which atmospheric nitrogen is converted into a more usable form by living organisms. Azotobacter has the ability to convert atmospheric nitrogen gas (N2) into ammonia (NH3) through the enzyme nitrogenase. This ammonia can then be used by plants for their growth and development.

Option 2, Anabaena, and option 4, Nostoc, are both types of cyanobacteria. While they do have the ability to fix nitrogen, they typically form symbiotic associations with other organisms, such as plants or lichens.

Option 3, Azolla, is a water fern that often forms symbiotic associations with cyanobacteria, particularly Anabaena. The cyanobacteria in Azolla provide nitrogen-fixing capabilities to the plant.

Therefore, the correct answer for a freeliving bacterium that helps in nitrogen fixation in soil is Azotobacter.