"Behold, he who has repented of his sins, the same is forgiven, and I, the Lord, remember them no more." (D&C 58: 42)
When I read this passage, my left hand said to my right: "Here is a paradox that undoes all your scriptures. For if a God must be all-knowing, how can your God forget sins, which make up the greater part of human history? You can have one: omniscience or forgiveness. Not both!"
But my right hand told my left: "God knows everything that has been, that is, and that will be. God can never forget facts and events: never turn his all-seeing eye from what has been done. But what happened alone does not create reality: reality is also created in the meaning God chooses to assign it. When we repent and are healed, it is by reassigning meaning to our sins: they become transformed from rebellion to experience as the thrill and shame of sin (which once tempted us to do wrong and then hide it) are replaced by the awareness and humility of forsaken transgression (which teach us how to love and choose right). Nothing that happened changes, but a tempter becomes a teacher, actions which were wrong become memories which teach us to do right.
God never forgets anything that happens, but he chooses to forget the meaning (sin) our bad actions first had and remember instead the new meaning (experience) created through repentance and healing."
To which my left hand said, "Drat. I thought I had you on that one."
(And my right hand said nothing more to my left hand, but whispered a great mystery to those who could listen, "As it is with God, so it was with us, who carry the seed of Godliness: our greatest power is in how we choose to assign meaning to the actions which take place constantly around us.")