(i) If God created us and allowed us to sin he essentially knew we wouldn't choose him and allowed us to go to "hell" which doesn't seem good.

See Augustine's On the Free Choice of the Will

(ii)If you read and bible with portions of it being allegorical, then how do you choose the portions that aren't?

We find out what is and is not literal through historically-minded, textual criticism. Such an undertaking is purely descriptive, however, not prescriptive. Determining what was and was not intended to be taken literally seems the task for a historian, not a theologian.

It is of very little importance to me whether or not Jesus Christ actually performed miracles; I doubt he did. I am unaware if the stories of him doing so were meant to be taken literally or figuratively. That just doesn't seem to be of much interest to me theologically. I don't see how the ethical and philosophical importance of the Christian message is undermined by claims of ahistoricity. Rather than worrying about what is and is not figurative, I think it is of more importance to worry about what is and is not of ethical importance. Here, I think we can make sound judgments. Jesus teaches to love everyone.

Some of the authors' of the Bible want that love restricted to people of certain races, genders, and sexual orientations. I believe here there is a clear discrepancy between what Jesus teaches us to do and what the early Church members did. What is irrelevant to me is whether or not they intended their homophobia as a universal rule or a context-dependent practice. That is the historians' job to unravel. All I care about is extending Jesus' love, as I think Jesus gives quite vivid commandments.