No, if you don't capitalize His name, it's not condeming you.
It's just courtesy, and it sets He appart from he, for clarity.
As for the free will thing, yeah, you can do bad things, there are no restrictions for those who do not wish to follow God. But, if you are a true follower of the Lord, then you will follow His teaching. We are all sinners, but we strive to be better people.
As always- None of my statements are evaluated by the FDA.
My advice is not intended to diagnose, treat, cure or prevent any diseases unless prescribed by a health practitioner. All information is provided for educational purposes only and should not replace the advice of your medical doctor.
(but your medical doctor will probably end up killing you