To answer the question, though, i feel that the mind is too complex to give a decent answer for, as we still don't know exactly how it all works.
2. I feel this question to have both explanations as the conclusion. A mind is material and immaterial. We know it is there because it proves itself to be by giving us life. The act of free will, however is also created by the brain, but sometimes the hand of God can take over.
The will to survive is a great example. Sometimes we don;t have a choice in what our brain does. If it means keeping the body alive, the brain will act on its own.
So does free will exist? The answer for me is a resounding maybe. The world is not as it seems, and there is no real way to prove or disprove an existence of God.
Oh, and on the topic of God's "perfect morality" I'd like to quote Ben "Yahtzee" Croshaw by saying:
"The root problem with Christianity is that their God is supposed to be all powerful and benevolent, and that sounds like an easy sell. But when life turns completely to s*** you have to come up with all kinds of wacked out reasons for why kindly old Jehova saw fit to run over little Timmy with a combine harvester, and leave him in a state of vegetative, limbless agony for eighteen years."