You're both right and wrong. You're right in the sense that we have free will, given to us by God; your argument about his not wanting automatons loving him because they have no other choice is sound.
However, putting aside the actual existence of God, if his nature is as stated in the Bible, he knows everything, correct? Everything also happens in accordance with his ultimate plan, correct? So if he knows what our choices will be before we make them, and he allows us to make those choices, then obviously they're pre-determined. So yes, we have free will and free choice, but we only make those choices according to our natures, which God has already determined.
God allows evil to exist in our understanding of "allows." But any true Christian knows that evil has already been defeated; indeed, it's been defeated since before it began. God knew exactly how everything would play out; he knew that Adam would partake of the fruit, allowing sin to enter the world, necessitating Jesus' intervention. Jesus' sacrifice wasn't a switch to "Plan B" as a result of Adam's will overriding God's, Jesus was always Plan A, because God knew what was going to happen in the first place.
God didn't instill sin in our hearts, we did that on our own. God is the one who saved us from ourselves.