Since Allah is all-knowing and all-powerful, why would he forbid people from drawing Mohammed (PBUH)?

It's primarily to avoid idolatry. Since people are made in the image of God (Allah), it would be blasphemous to depict the image of God (Allah) by a human (some go that far, but today it's not as extreme). The depiction of Muhammed, in particular, is considered blasphemous and could lead to idolatrous worship. Since he is the principle human figure in Islam, most Muslims believe they have a right to draw the line there regarding his depiction. If one wants to see Allah, according to Islam, one should read the Quran, not look at an image of his prophet.