Hi Jeanemarie,
Good points. Abraham had the same Faith that we have. He believed God's promises and in His goodness and mercy. Obviously Abraham didn't know what God's ultimate plan of redemption was, but he was like us, saved by Faith alone in Christ as all the OT saints were. We also believe the promises of God, and have Faith in Him. We see the very hints of the Gospel in Genesis 3:15:
And I will put enmity between you and the woman, and between your offspring and hers; he will crush your head, and you will strike his heel.”
Compare Romans 16:20:
The God of peace will soon crush Satan under your feet. The grace of our Lord Jesus be with you.
God unfolds His redemptive plan progressively in Scripture, small startings from Adam and Eve, to the Family of Noah, to the family of Abraham which grows into a nation. In the nation God dispenses his Covenant of grace by giving the Siniatic covenant (Covenant to Moses), even here salvation is by grace through Faith, the law points to the redeemer, the laws are types and shadows of the greater and better to come.
The greater and better to come was Jesus Himself, He fulfilled all the requirements of the law, and by living, dying and being resurrected secured for us in the better covenant (that is the siniatic) Salvation that will not perish, salvation that no longer requires the types and shadows, for he is the ultimate paschal lamb. This was already foretold in the OT.
The Holy Spirit now operates in believers, and in this we have our union in Christ so that we can be deemed Holy in the life and work of the paschal lamb.
You are right we live by the Holy Spirit in this New covenant, as the OT Saints lived by the letter of the law. These two covenants, are both by grace, and all saints whether in the Old or New are redeemed by grace alone, through Faith and in Christ. The covenant of grace was long before the law, we see it in Gen 3:15 and more clearly in the Abraham narrative, and now fully in Christ.
And the question still remains, why did God plan redemptive history the way he did? Well, I don't know, all I can say is God is Sovereign, He rolled out redemption progressively, culminating in Jesus and the Earth and heaven's. From Creation to re-creation.
How we live by the Spirit is obeying God's word.