In regards to the tree of knowledge, they certainly did die spiritually that day, now having their entire souls be transformed from being pure to evil. However, it is also understood in the original Hebrew to mean that one will begin dying (aging) that day, rather than die that day.
Had God let them eat from the Tree of Life, sure, they would have been immortal now, yes. But you're on a sewer slide website. Would you want to be an immortal suffering in a world cursed by sin and evil, seeing how your actions hundreds to thousands of years ago have caused everything? :( Even if you did, eternal life separated from God by sin is a good description of Hell.
Adam and Eve had always been able to think for themselves. After all, they could not have eaten had they not had free will.
I wouldn't describe them as being set up for failure, but that they were set up to be perfect. After all, which is better? An AI that's programmed to love you or a person who freely chooses to do so on their own? The person is better because they find you worthy of love while the AI is merely forced to. Now, they rather obviously, did not choose this perfection, but that's because God granted them free will as part of this.