Again, your understanding is flawed. Humanity as we know it wouldn't exist without free will. There is no flaw in saying that god is all knowing and that humans still retain free will.

If people weren't allowed to make choices despite some of those choices being bad, they wouldn't be sentient, they would be nothing more than complex machines.

You are judging god based on your own pettiness for not personally stopping all evil. Would you prefer slavery to free will, if that slavery was comfortable?

There is plenty of law that has been recognized as being wrong by the citizens under it, law and morality haven't been considered to be the same by all previous societies. States have tried to assert themselves as moral arbiters, and ignorant statists have gone along with that, but that doesn't make it factual that law and morality are one and the same, and the force that kept order wasn't the state. Weak states can't maintain order, social forces like religion do that. Strong states maintaining order through force just inspires rebellion, not morality.

Law and morality can correlate to a degree, and law is necessary, but no intelligent person would argue that law is the whole of morality or that morality comes from law.