All Knowing means that he knows everything. Since there is no such thing as fate, knowledge exists on the level of possibilities and probabilities. Therefore, all knowing is a statement that goes together with best guess. (And since knowledge is power, he is also all powerful. See how that works?)
I addressed Satan above, but to make a long story short, because everything God does, he does of his own free will. After knowing what that is like, how could he deny us a choice? He gave Satan free will, knowing he might be a bad seed. I think that if Satan were willing to just get some balls and say, "you know what God, I thought I could do better than you, but I can't. Sorry", God would say, "it's ok." Because he would be shown what Satan feels and thinks.
"Good" is a moral term. There is no such thing as "good" in a community sense, because good hinges on morals, which are the individual concepts of good and evil that resides in each person. Morals do not exist as a societal ruller by which we can measure everyone, because we cannot hope to apply thoroughly human concepts such as morals to such a broad cattegory as "all humans" Only ethics, the thing most or least benifical to you and your fellow man are aplicable to humankind as a whole. Under that idea, God has all knowledge about the possible ways to use his absolute power for ethical and unethical ways. He chooses ethical because in the long run it works better than unethical. He has learned this after trail and error (again, back to the fact that God is not perfect by our human definition of perfect, because our definition is tainted by morality). He then gave all his creations the same choice. We were created in his image. That is to say, our souls were given the capacity to uderstand the ethics of God, and the free will to choose, but we were not given the knowledge with which to use it. He put us into a situation where he said don't eat this fruit or you will die. He wasn't lying, and we've been dying ever since. What we seemed to not understand was that we keep on recycling until we get it right. Our souls, being energy, can not be made or destroyed, only converted into other forms of energy. If new souls must be born, God shifts energy into the form of a soul, a conciuosness that understands and thinks, but requires knowledge to be complete. He wants to see how we seek this knowledge because in seeing it, He can understand the value of such knowledge. That is to say, God knows that knowledge is a powerful force, but since he's had his from the begining, he might know what gaining knowledge feels like but he has never felt it. God can gain understanding, comprehension, but no more knowledge.
So in giving us free will and setting our souls upon a course where we continue living in different forms to gain not only knowledge but also understanding, he can come to know, through the link between us and him that is the "Holy spirit", what it is like to gain the knowledge he has (Which is the purpose of the holy spirit; that and to be our inner Ethics-o-meter). If God had given us only the capacity to do ethical things, he would never come to understand why it is that he does not feel compelled to do unethical things. He created us so that we could help each other. He gives us life, knowledge, experience and a form inspired by divinity, and we give him an understanding of just what he has always had.
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PC: Can you help me out here HK?
HK-47: I'm 98% percent sure this miniature organic meatbag wants you to help find his fellow miniature organic meatbags.
PC: And the other 2 percent?
HK-47: The other 2 percent is that he is just looking for trouble and needs to be blasted, but that might be wishful thinking on my part.
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