Joseph Smith's part in authoring the "Lectures on Faith" is still uncertain; they seem mainly the work of Sidney Rigdon, with significant input from Joseph,1 and, of course, as many readers have suspected, reflect a very early stage of Mormon doctrinal expression about God, one still heavily influenced by traditional Christian ideas and categories. For instance, God is described as a personage of Spirit, only Christ as a personage of tabernacle, and the Holy Ghost not as a personage at all but a kind of single unifying mind of both the father and son. Those who teach from the "Lectures on Faith" have had to editorialize, to add footnotes and explanations, in order to make it conform to later orthodox Mormon thought, as, for instance, Joseph Fielding Smith does at the beginning of his book, Doctrines of Salvation. This problem was recognized in the inclination by Church authorities to revise the "Lectures on Faith" in the early 1900s, or at least to add a footnote, and then the decision instead to exclude them from the Doctrine and Covenants in 1921.2 However, Joseph Smith never repudiated them. It is likely that, had they been written later as his understanding developed, he too would have qualified or explained some of the terms used there, but I think he saw no inherent contradiction between them and his later understanding of God. He wrote, shortly before his death, "By proving contraries, truth is made manifest,"3 and certainly could see the contraries in his understanding of God: that God could rightly, as he is in the scriptures, be described as having all knowledge and power, sufficient to provide us salvation in our sphere of existence (and thus being infinite) but could also be described in the terms revealed to Joseph in the Doctrine and Covenants as unable to create the universe and its laws, or us, out of nothing or to force us to be good (and thus "finite"). --Eugene England
What I gather from this is that we were BOTH right. God is omniscient -- all knowing/all perceiving/etc. but He also knows the hearts and minds of His children and is a great predictor of behavior. There is not contradiction in this -- and by proving our "contraries" I expect we will find great truth.
(I'll keep you posted.)