But how are you so sure that He *did* mean a physical death? What we have is simply a translation of the widely-accepted canon of the Bible. In the Hebrew language, there were many words for many different things (such as many words for "day," depending on the definition) and, since death is such a prevalent topic, I am sure there would be a word in the Hebrew Bible that clearly meant "physical death," just as there are words that mean "literal day" and such like that. There are many ways that verse can be interpreted, and nitpicking over it isn't really going to help much. The fact is is that it truly was a spiritual death, and perhaps that is what He meant. That is what I believe He did mean.

And yes, I understand the world is technicolor. But actions are either good, neutral, or bad. And if they're neutral, they contribute things to both sides--good and evil. And if God wants us to be perfectly happy and not have any grief and suffering, would He not eliminate the neutral choices as well as the bad, if only for the simple reason that neutral choices do not help anything? You seem to say that God must only want us to do good. If so, then he would have *restricted* our free will into only being *able* to do good in our free will.