Woke up to this. Wow!
A few points from my Rebbe, Rav Yitzchok Berkovits:
1. When Chazal use "heart" they refer to the brain. (Ask him if you want a source, but he's been saying this for thirty years at least.)
2. The source of one's desire to do good is the soul. The soul's desire to do good is a combination of logic and knowledge of the true metzius.
3. The source of one's desire to do evil is the body that the soul is encased in. In almost all (but not all) cases, even when one's desire for evil is dominant, the soul retains its desire to do good. It is rare, though possible, for constant evil to erode the soul until it is impossible for the process of Gehennom to heal it. For everyone else, Gehennom is there to heal the soul of the damage that sin creates.
Hope this adds some clarity, and I hope I am not mutilating anything RYB said (always a possibility).
You know, the optimist in me wants to relabel this thread "Random Answers."