Re the challenging thing, imhe I have found that it is a self preservation measure taken by smart horses who have had humans loose their patience with them in the past. (Which is easy sometimes to do because some personalities require a lot of patience. A lot.) The ones I have known that tend to challenge their handlers appear to do so deliberately to see at what point the human will blow up... and what the human will do (to them). Its as if they want to know where the line in the sand is, and they will push you until you show them. Its an incredibly clever, proactive, self-preservation move. Which can easily turn into an incredibly frustrating game with a handler who's buttons are easily pushed.
My morgan was very troubled when I got him and really needed a strong leader to make him feel safe. Firm yet fair. My morgan has a very strong sense of fairness and, quite frankly, etiquette. To this day we have to lock horns at least twice a year, he wants to know if I've gone soft on him. But the rest of the time he's incredibly willing and generous... mostly.
I've also found that the typical 'escalation of aids' way of getting one's point across can be viewed as an attack by clever sensitive horses, so my Morgan has trained me to take a Gandhi approach. When teaching my horse something I first apply the low key aid I wish for him to ultimately become responsive to, and when no response I pick a more escalated but still moderate level of asking and I keep the volume there until I get the response I want. I don't escalate as in ask. TELL. NOW! because I find that invites a battle royale. Instead I: ask. TELL. TELL. TELL. TELL. TELL. (have a cup of coffee) TELL. TELL. TELL. TELL. until I get the desired response. Then its a huge verbal reward and a tidbit (definitely food motivated, and easily trained to be mannerly about it to).
If you do the tidbit route, find a treat that is small in size. They do not require much, and the ones I've known are such easy keepers that gobs of hand outs can actually have an effect on them.
Treats seem especially valuable with my Morgan because it seems to be concrete evidence that he did something correctly.
Oh, and on a side note: it doesn't take long to teach them something - for better or for worse - and once they've got it, its set in stone, it'll be there forever
I was once attempting to free longe my Morgan over barrels. Not realizing I had intended him to jump over it, he ran up to it, stopped, hooked his front leg over the barrel and politely slid it to the side, jumped over the ground pole that remained and said "Ta da!". I was on my knees in the dirt belly laughing. I believe horses recognize laughter, my Morgan even more so, so to this day he believes his job is to move barrels when they are in his path It took me a long time to convince him to go *over* them please.
The really cool thing is when you develop a good working relationship - where they know what they can expect of you, and they can rely on you to be consistent and fair - they are the NEATEST horses. They will just keep giving and giving and giving and wanting to do more and more and more for you. Their desire to please can be bottomless.
The key is getting that good mojo happening though, and that can take some time.
It took me a long time to connect with my Morgan. When I got him I had just come off fixing up a series of troubled but fairy easy horses. I was feeling cocky and went looking for a real 'bad ass' for my next project. He humbled me right quick and it wasn't until I changed my perspective from "how do I make him do this" to "how can we connect and work as a team" that I had any measurable success with him. It took *me* a long time to get over myself. Now, six years later, we have such a nice relationship I can teach him just about anything in 20minues or less... he's my little vunder-boy.
The part thats hard to put into words is how my horse has improved me as a person. The journey I took learning how to get along with him has taught me so much about myself.
Find your inner Gandhi and remember when you get frustrated with him, he was frustrated with you first.
Also, consider dabbling in the concept of clicker training (no need to actually have a clicker, its the concept and timing that counts). Being a breed that tends to be so incredibly motivated by praise, learning new things and tidbits, the concept of clicker training is right up their alley and can launch pad you to the status of "oh boy, she's here! We get to play that game again!"