I am confused about the correct way to generate content for a piece. Should I generate all my content in the prewriting stage using free writing? Or should I use prewriting only to spark content that I will further develop in a first draft? By the time you write a first draft, shouldn't you already have an arrangement in mind for the content? Should the content, which you will write down following that arrangement, be further developed, and wouldn't that sometimes behoove you to change the arrangement?
You can do it however you want, and in the manner that works best for you. There is no "right" way or method that you must follow.
For some writers prewriting and outlines are athemia. Don't overthink it. Just write. Follow a character or lay down the foundations for your story arc. By prewriting and overanalysing you'll only dig yourself into a hole by second guessing yourself. Let your characters do the work. A rough draft is simply that, a rough draft. It will be terrible, they always are. As long as you know where your story is going to end then you will be just fine. As I have mentioned countless times before, slow down and enjoy the journey. All you need to do is put one foot in front of the other, or in the medium of writing one keystroke after the other. Simple way forward: Breathe, put yourself in your character's head, and record what they are experiencing.
You have to experiement to find out what process works best for you. Some have a detailed outline; others write without notes. Some have myriad drafts, some only one. Most writers are somewhere in the spectrum between those. (I have no outline, research as I come to the need, make a few notes along the way that may or may not make it into the story, and have one and only one draft.)
Yours is a question of planning vs pantsing. I personally am a planner. Taking horror authors as an example, Stephen King is a pantser who knows "fuck all" about what he's going to write, whereas Clive Barker (Hellraiser) plans his longer projects like novels, so either method can work.