Tec, obviously a just God would not OK torture and the other bad things the Church did. But if he interfered and said "stop doing those terrible things in my name," what would happen to our freewill? And yes, if you are sincere about Jesus Christ, you know better than to do those things. But also consider context. The Catholic Church was the foundation upon which many people's faith relied. Suddenly, the Church was facing a break with the reformers and was being infiltrated by fake converts, like the Marranos, which led to the Spanish Inquisition. It took a harsh reactionary position. Was it right for them to take such a harsh position? Probably not. But that is what the leaders chose to do. What was God to do? What is your advice to God in that situation? Regardless, the Word was proliferating throughout the world. The Church's faulty actions can be attributed to individual sin, since an individual or small group of individuals chose to make the decisions on behalf of the greater Church.
New Chapter, I will answer your questions, without getting into theology, with simply that God allows bad things to happen for the sake of maintaining our freewill. Is that so difficult a concept to grasp? If God stopped all bad things from happening, you would complain that he wasn't letting you decide the course of events in your life. You want to have your cake and eat it too?
You can't argue that the Bible contradicts itself, because it never promises utopia in this world. Even the millenial reign wasn't to be a utopia, and it clearly wasn't.