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Craig's argument is clever, but a little convoluted. Perhaps there's an easier way to think of the problem.
In a post titled God and Time last July Viewpoint suggested that the problem Craig is addressing arises because we tend to think of God as inhabiting the same time that we inhabit. God, however, is transcendent. He exists outside of the space-time world that He created. Thus everything that happens in our time - our past, present, and future -reside continually in God's present.
We might think of it this way: God is like a vast sphere or ball, and time is a thin line segment drawn in ink across the surface. Every part moment in time, like every point on the line, is in contact with God simultaneously. God is continually conscious of every moment in our time. He stands in the same relation to our past and our future as he does to our present.
It follows that God knows the choices we made yesterday. Yet we don't have to think that because he knows what choices we made yesterday that He therefore caused those choices. Nothing about God's present knowledge forces us to conclude that our past choices were determined by Him any more than our knowledge of past events somehow caused those events. Knowledge after an event doesn't cause or determine the event.
Prior knowledge of future events is different, though. If we knew, genuinely knew, that a particular event would occur tomorrow, then we might be tempted to think that tomorrow's event is inevitable, that it must occur. This, however, is because we are embedded in time. God is not. Our future is in His present just as our past is. His knowledge of the future is similar to his knowledge of the past, and, if the two really are like mirror images of each other, His knowledge of an event or of a choice we will make tomorrow does not cause us to make that choice.
His foreknowledge would be no more determinative than His post-knowledge. Indeed, it would be more correct to say that just as our free choices yesterday caused God to have the knowledge He has about those choices today, so, too, our choices tomorrow cause the knowledge He has about those choices today. Our choices determine His knowledge. His knowledge doesn't determine our choices. Thus God can have foreknowledge of our future and humans nevertheless remain free to create it.