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I'm not saying something isn't an option because God directly places boundaries on your actions; I'm saying that another form of existence in which evil is impossible on a level of natural truth (like physics) would create limits without inhibiting free will. Did you not read my variation of choosing a car color or the limitation of nonexistence? We are incapable of disobeying the laws of nature, but these limits are already in place while free will is thought to exist by many people. These limits still allow choice as it is thought of currently. Otherwise, free will would mean.... omnipotence.
The bolded part is what I have a problem with. On the surface it might seem okay to hypothesise about an existence where evil is impossible but I firmly believe that such an existence is an impossibility so any conclusions made from that hypothesis are meaningless. It's the same as when people ask "what if the Sun vanished, would we instantaneously leave our orbital path?"
Nice idea but impossible as it would simply break phsyical laws. I believe an existence without evil would break the laws of free will.
Perhaps the inability for us to imagine it is throwing you. The bolded text was most useful to me in determining your train of thought. Breaking physical laws is strictly in our definition of physics. If God is the creator of physics, than he should be able to create them in a sense that evil doesn't exist, not that we don't think of it.
The color "Kraomos" doesn't exist, so we can't imagine it. Because we can't, does this mean we don't have free will?
First you would have to define evil; impossible, then you would have to somehow have everyone doing good (which would also need to be defined; impossible).
No definition is universal. In the sense that the bible or religion sets attributes to God (like omnibenevolence) those same concepts of good/evil are used and considered. Describing them perfectly with words is the obstacle.
The breakdown occurs when you come to a simple cross-road in someone's life where they commit an act of good (or in this universe it would be simply any act because all acts would be good). How exactly would you stop said person from doing the opposite?
Why does this possible universe have to have opposites? What is the opposite of 'grape flavored'?
let's use a simple example: A man walks down a street and sees a lady drop her purse unawares. Let's say in our definition of good, picking up the purse and giving it to the lady is a good act. If the man has been made in such a way that he does not even think about keeping the purse then he has no free-will. He is programed to act a certain way.
The purse implies financial loss or gain and thus potential harm. An all-powerful all-knowing God who created the universe, physics, etc. should have created a world without potential for harm. Since I am not omniscient, I can't describe a perfect world.
However, the first idea of not being harmed makes me think of the tin-man from X-men.

It has to be possible if he can create natural law and is omnipotent. Omniscience may play a role too for comparing all that could be.
Take a real world example. In a computer game the enemy A.I. may be programmed in such a way that they can calculate lots of different ways of attacking you but they simply do not have the capacity to "not kill you". They have no free will. A world without evil is not a world with free-will. You can't define it for starters and you can't prevent people from doing the opposite of good without taking away their free will.
This example is reversed in glorifying evil rather than extinguishing it, but it is still very useful. In this case, consider this question: What if it was fundamentally impossible for the enemy to inflict damage? ...A world where nobody would understand what 'pain' means, becuase nobody could cause it. Once again, common experience of this world inhibits imagination of such a different world.
Applying physics to philosophy doesn't work like when one tries to apply it to religion or FET for that matter.
Do you mean "physics", or "rationalism and logic"? The two main branches of philosophy are that of rationalism and empiricism and a very large portion of famous philosophers were rationalists.