Is it Really Free Will?

Religion is one of those things that i try not to get into an argument about. It's too close to home, it's rather personal for most persons and frankly people get really offended when you start to dissect what they hold to be true and holy and show that it might not be quite so whole. Anyway, here is my problem; and I'm sure to step on a few corns and maybe somebody out there can explain this to me...ok ready.........

The Father, the son, the holy spirit...(i don't really understand the whole trinity thing. I know Jesus, God and i don't really know what/who the third is) is supposed to be All Knowing...which, to me means, he knows all that will happen to a lowly life like mine before i am even born right? Ok, so if i am born and turn out to be a total bum etc etc "He" knew this.
We have Free Will. So, we aren't forced to make choices, we can, if we so desire, turn to a life of crime and fornication or we can be all saintly. Ok, fine so we have so far All knowing, free will for all and then there is the premise that "He" is the ultimate in Benevolence. So "He" essentially wants the best for us. So let me recap the assumptions

1. "He" is All Knowing
2. We have free will
3. "He" is benevolent

This is where i get confused:
If "He" is all knowing how then can we have free will. He knows what we will do before we do it, he knows which choices we make and will make, he knows everything about our lives.

My next query is this:
Some of us, have some damn hard lives, seriously hard, i haven't always had it easy and i have had a pretty good life compared to most. So, how then does the ultimate benevolent being "allow" us to have such a difficult life? Because we have to make the right choice you say? Well that brings me back to my point; can we really have free will.

It baffles me, even though i must admit I try not to even fathom it because as far back as i can remember, logic and explainable reason were never really religion's strong points. But i would love if someone could shed some light on it for me. Is there are part of the equation that i have omitted?