This is just a huge confusion. I'll try a tack I've tried before. Sometimes it works.
First, take God out of the picture. Let's take a statement about the future such as:
F: The Netherlands will win the World Cup in 2010.
Now, I don't know whether F is true or not. Presumably, there's a truth to the matter about who will win.The question is, what would make F true? I should think that the Netherlands winning this year's WC would make it true. (This is a controversial thesis. Many philosophers argue that propositions about the future simply cannot be true or false; only propositions about the present and the past can be true or false. I'm bracketing this argument for our purposes.)
Of course, nobody knows if F is true. We will find out when the final match is played. But if F really is true, what follows? Certainly it follows that the following proposition cannot be true:
F2: Spain will win the World Cup in 2010.
But if F is true and F2 is false (and remember, at this stage of the argument nobody knows, not even God should he exist), what else follows? Does it follow that Spain never had a chance to win? Does it follow that the Netherlands were bound to win, and the other teams needn't have bothered to compete? In other words, does (a) the truth of F determine the players' actions and choices, or do (b) the free actions and choices of the players determine the truth of F?
I think most of us would say (b), and for good reason. It just seems weird that the truth value of an abstract object like a proposition should determine what people decide and do. But it makes perfect sense that the truth of a proposition is dependent upon what people freely decide and do. This intuition is so basic and obvious that it defies argument.
My argument is that if the TRUTH of F is determined by the free actions and choices of the players (not the reverse), so is someone's knowledge of F. To illustrate, imagine a psychic knows F (and that this particular psychic's abilities are fully genuine and reliable). If the truth of F is determined by the players' actions and decisions, then so is the psychic's knowledge of F. The psychic's knowledge doesn't interfere with the players' actions and decisions; rather, the psychic knows what she knows by virtue of what the players will in fact freely do.
What's true of the psychic, who only knows a limited number of truths about the future, is true of God, who knows all truths about the future. God knows everything, but his knowledge, like the psychic's, is dependent on what people will in fact freely do. God knows what he knows because people will do what they will do; people don't do what they do because God knows what he knows.
It seems to me that the claim that omniscience entails determinism is simply a confusion. The confusion goes way back to ancient Greece where philosophers puzzled over what has come to be known as logical determinism, the view that propositions about the future have truth value, and that if there is a truth about the future, then we are not free. This, as I've argued, is a provocative and inviting argument, but hardly intuitive or even, in the final analysis, cogent.