My understanding concerning this is that free will will still exist during the age of Moshiach, yet nobody will desire to transgress the law...
http://www.chabad.org/library/article_cdo/aid/832728/jewish/Free-Choice-When-Moshiach-Comes.htmQuestion:
Will we still have freedom of choice when Moshiach comes? From what I've read, it seems like we will automatically do the right thing. And without any decisions to make, won't life be pretty boring?
Response:
I like this question. When Moshiach comes, there won't be the many layers of confusion that make life so difficult. Priorities will change. We will sense the importance and beauty of the Torah and Mitzvot. Being generous with others will be natural. Divine wisdom will shine through every aspect of the world. In the words of the prophet, "The entire world will be filled with knowledge of G‑d as waters cover the ocean."1
And with the truth so obvious, who will be able to do anything wrong?
However, good versus evil is not the only decision we make in life. There's another sort of free choice too--one that will even apply even when Moshiach comes: Good versus better.
Today, the question is often whether or not we do a certain good deed. When Moshiach comes, it will be to what extent we do that Mitzvah. Will we push ourselves to the max or just be satisfied with a regular job. Today, we choose between using our talents for good things or bad things. When Moshiach comes, we will choose between nurturing those talents even further or just letting them be.
I think this answers your second question. You are right. Obstacles give us excitement. They provide us with a drive for life. When Moshiach comes, that drive will be there--only in a different form.
Think of both an airplane and a rocket. They both require a form of resistance in order to fly. In the airplane, this resistance is provided through interplay with an external factor: the varied degrees of air pressure on both sides of the wings. Now, above a certain elevation this is no longer possible. You have to create your own resistance that pushes downwards. This is the rocket.
Today, our battle is between good and bad. With evil working against us, we make the right decisions and propel ourselves forward. But when Moshiach comes, we'll leave this atmosphere. Evil will become a no-brainier. We will need our own rockets - the challenge of good versus better. And we will use freedom of choice to decide just how high we want to soar.
As the Talmud tells us, "Tzadikim have no rest, neither in this world, nor in the next." In the words of the prophet, "They go from strength to strength."2
FOOTNOTES
1. Isaiah 11:9
2. Talmud, Brachot 64a