The person you talked to was obviously an idiot. You don't give out code owned by a previous employer for any reason.

OTOH, it's not unreasonable to mandate that applicants have some specific free software contribution they can point to as an example. This shows several things. First, it shows that the person is geek enough to enjoy coding on their free time. Second, it gives you an idea of what they think is their best work, since you generally have more time perfect your free software code than code you are paid to write (unless of course the two overlap).

As a semi-aside, one of the best things you can do for your career is make noticeable contributions to free software projects and/or start your own. This is basically free publicity to insiders at hundreds (thousands?) of companies.

My current full time job came about because one of the company's other employees, Brian Ingerson of Kwiki fame, knew about my various Perl modules and thought I'd be a good fit as a new hire based on that, even though he and I hadn't worked together previously.

Much of the work I've gotten in the past few years has come to me at least in part because of my free software contributions. I've obviously spent a pretty large amount of my own time on this stuff, but it's definitely made my career path much, much easier. Since I like to code but I hate to look for work, this has worked out well for me.

Given that employment is not a sure thing, it can't hurt to start building up a free software profile right now. If you're not sure where to start, there's things like the Phalanx Project, or the Linux Kernel Janitor Project. These can be nice ways to get a start. Even better, see if you can get your current employer to let you release some code, or to work on improving existing CPAN modules you use in house.