I would say that Eru is in the Timeless Halls, thus outside time, and so verb tense is only our restriction when we try to understand how one can have free will even if Eru 'knows' what a given person 'will' do, for example..
Boethius treats the problem of Free Will, in part.
"But," thou wilt say, "if it is in my power to change my purpose, I shall make void providence, since I shall perchance change something which comes within its foreknowledge." My answer is: Thou canst indeed turn aside thy purpose; but since the truth of providence is ever at hand to see that thou canst, and whether thou dost, and whither thou turnest thyself, thou canst not avoid the Divine foreknowledge, even as thou canst not escape the sight of a present spectator, although of thy free will thou turn thyself to various actions. Wilt thou, then, say: "Shall the Divine knowledge be changed at my discretion, so that, when I will this or that, providence changes its knowledge correspondingly?"
'Surely not.'
'True, for the Divine vision anticipates all that is coming, and transforms and reduces it to the form of its own present knowledge, and varies not, as thou deemest, in its foreknowledge, alternating to this or that, but in a single flash it forestalls and includes thy mutations without altering. And this ever-present comprehension and survey of all things God has received, not from the issue of future events, but from the simplicity of His own nature. Hereby also is resolved the objection which a little while ago gave thee offence—that our doings in the future were spoken of as if supplying the cause of God's knowledge. For this faculty of knowledge, embracing all things in its immediate cognizance, has itself fixed the bounds of all things, yet itself owes nothing to what comes after.'
But even that is limited by 'time'. Carl Hostetter had some interesting things to say about fate and free will, since it fell to him to present Tolkien's notes on the subject in Tolkien Studies:
"A.S.", you are certainly right so far as you go, that the one sense of "fate" as meaning our "ultimate destiny" is part of what the Ainulindalë passage is concerned with. Tolkien makes it quite clear there and elsewhere (including The Lord of the Rings) that it is in "ultimate destiny" that Elves and Men chiefly differ.
What is tricky, though, is that it is equally clear in the Ainulindalë passage that Tolkien is not thinking only of this, for the passage reads: "Therefore he willed that the hearts of Men should seek beyond the world and should find no rest therein; but they should have a virtue to shape their life, amid the powers and chances of the world, beyond the Music of the Ainur, which is as fate to all things else" (emphasis added). Very clearly this special virtue that Men are given is operative within the World and throughout Men's lives, not merely in their ultimate destiny.
And so I can readily understand Verlyn's take on this: if one uses this passage as the basis upon and lens through which all other published evidence is evaluated, and if one equates this "virtue" with "free will", it is easy to argue that Elves do not have free will. I'm not saying it makes for a convincing or satisfying argument -- after all, none of the Elves ever act as though they don't have free will, and in fact they are often presented as having to make crucial choices with serious consequences (moral and otherwise); while Frodo and other Men are often described as fated (or possibly so) -- but it is an easy and obvious argument to make.
But I begin my paper by noting that Tolkien does not say here that Men have a unique gift of "free will", but rather that they are given a "virtue". Verlyn assumes they mean the same thing; I submit they do not: virtue is ability and strength and efficacy, not merely will (i.e., purpose or intent).
Moreover, if Verlyn is right, it is very hard to explain (in addition to the points I allude to above) the existence and content of the unpublished notes I presented, which discuss the Elvish thought on the roles of fate and free will within the World and make no mention of any limitation of free will to Men. What it does do is draw distinctions between what Men mean by "fate" and what Elves mean by it, and as to the "given conditions" within which will is constrained to operate. And that, I think, is what we must do as well: what does "fate" mean in the Ainulindalë passage? What does the Music of the Ainur, which is "as fate", encompass, and so what exactly are its constraints, that Men alone can go beyond?
And just as importantly, what does the Music not encompass and constrain? And what are the "powers and chances of the world", amid which the special virtue of Men operates? And are fate and free will really at odds with each other? (As I have said, I submit in my paper they are not.) Tolkien touches on all these points, both in the unpublished notes and in numerous published writings (particularly Letters).
... Tolkien's own discussion in the unpublished note on "Fate and Free Will" certainly makes no claim or even implication that Free Will obtains only when there is an ultimate consequence to its exercise. Rather, there, "free will" is defined as obtaining when (and only when, but by implication always when) a determination of course (action or inaction) is made for a "fully-aware purpose", amid the physical conditions and processes of the world (ambar) and the network of chances within "fate" (umbar). As Tolkien says in Letters, Free Will is "derivative" (i.e., I take it, of God's will and of His creation of the world and of rational creatures which He endows with will) and therefore always operates "within provided circumstances". As these unpublished notes explain, these "circumstances" are both ambar 'the world' and umbar 'fate': and these are "provided", of course, ultimately by Eru himself. Obviously, exercises of Free Will so defined can have moral valuation, can even be "sinful", within the world and apart from questions of one's ultimate destiny, since they can either accord with or violate the moral standards of the world that ultimately also derive from Eru.
They can also have moral consequences within the world, not just for ultimate destiny, and not just for Men: consider, for example, when Tolkien conspicuously notes that had Feänor chosen to surrender the Silmarils, things might have gone better for him subsequently, even though in the event he could not actually have surrendered then, since Morgoth had by then already stolen them. Feänor was presented with a choice, amid ambar and umbar, and whichever decision he made had a consequence for him, even though neither choice would in the event have effected the restoration of the Trees. That sure sounds like a moral consequence to me, even if as an Elf it had no (known) effect on his ultimate destiny.
Carl Hostetter [culled from threads on line, sorry that the remarks are here out of context]