The following two are more relevant quotes to your points:

Mortal: Well, are my acts determined by the laws of nature or aren’t they?

God: The word determined here is subtly but powerfully misleading and has contributed so much to the confusions of the free will versus determinism controversies. Your acts are certainly in accordance with the laws of nature, but to say they are determined by the laws of nature creates a totally misleading psychological image which is that your will could somehow be in conflict with the laws of nature and that the latter is somehow more powerful than you, and could “determine” your acts whether you liked it or not. But it is simply impossible for your will to ever conflict with natural law. You and natural law are really one and the same.

Mortal: What do you mean that I cannot conflict with nature? Suppose I were to become very stubborn, and I determined not to obey the laws of nature. What could stop me? If I became sufficiently stubborn even you could not stop me!

God: You are absolutely right! I certainly could not stop you. Nothing could stop you. But there is no need to stop you, because you could not even start! As Goethe very beautifully expressed it, “In trying to oppose Nature, we are, in the very process of doing so, acting according to the laws of nature!” Don’t you see that the so-called “laws of nature” are nothing more than a description of how in fact you and other beings do act? They are merely a description of how you act, not a prescription of of how you should act, not a power or force which compels or determines your acts. To be valid a law of nature must take into account how in fact you do act, or, if you like, how you choose to act.

So the free will isn’t as tied to non-determism as we like to think. This leads us to a false dichotomy. And you will have read correctly that Smullyan doesn’t see the ‘God’ as all-powerful but rather more all-enveloping, the God isn’t detached from the person as he’s thinking. Also that the god image of the percieved Judeo-Christian faiths are a bit different than the God in a taoïst understanding (which Smullyan adheres to and thinks of as a more logical deistich model.

His main point is about the misunderstanding of determinsm, as in the following passage:

God: It is interesting that you have twice now used the phrase “determined to act” instead of “chosen to act.” This identification is quite common. Often one uses the statement “I am determined to do this” synonymously with “I have chosen to do this.” This very psychological identification should reveal that determinism and choice are much closer than they might appear. Of course, you might well say that the doctrine of free will says that it is you who are doing the determining, whereas the doctrine of determinism appears to say that your acts are determined by something apparently outside you. But the confusion is largely caused by your bifurcation of reality into the “you” and the “not you.” Really now, just where do you leave off and the rest of the universe begin? Or where does the rest of the universe leave off and you begin? Once you can see the so-called “you” and the so-called “nature” as a continuous whole, then you can never again be bothered by such questions as whether it is you who are controlling nature or nature who is controlling you. Thus the muddle of free will versus determinism will vanish. If I may use a crude analogy, imagine two bodies moving toward each other by virtue of gravitational attraction. Each body, if sentient, might wonder whether it is he or the other fellow who is exerting the “force.” In a way it is both, in a way it is neither. It is best to say that it is the configuration of the two which is crucial.