You *definitely* have to disclose the fact that you were at another law school. Schools specifically ask that on their applications. I disclosed that and included an addendum about it. If you lie, I'm not sure what the repercussions would be but they could be serious. In retrospect, I feel that I could have saved a lot of money if I had done more research beforehand. I was scared to speak to people in admissions but I feel that it would be worth it to get their feedback on the situation. I scored in the low 160's and had an almost perfect gpa from a top 5 liberal arts college. I also have been working on wall street as an analyst since I first withdrew from school so I had some serious work experience under my belt. I too had family, money issues and could not focus on school while I was there and had horrible grades as a result. Despite this, I felt that most schools did not really give me much leeway or perhaps they expected me to go back to my original school which was also a top 20 school. I think I got really lucky to get off the waitlist. At any rate, I agree with your prof that a high lsat is very key especially these days where most of the tier 1 schools have similarly high lsat numbers for their entering students. LSAT's were not as high when I applied 7 years ago but now they are.
I think you are doing the right thing by taking Powerscore. It is a much better lsat prep course.