Why was d7 a better choice?

This is the Hanham variation of Philidor's defense. At this point, Black has two major options 3...exd4 (preventing white from weakening Black's kings-side), or 3...Nd7 (the Hanham variation), or 3...Nf6. Moves 4 and 5 shed more light on why 3...Nd7 is better than 3.Nc6

except it takes the h3 square away from white's knight, which would have a nicer position on f5 and open the queen's path along the diagonal??

The h4 square is not immediately available for White's knight! The priority for Black in this position is to try and bolster the queen-side with either 11...Qb4 or 11...b5.

Can you suggest another move for black here?

You are right, my note here is irrelevant. 13...Nd4 seems to be the most natural move in this position (Rd7 or Kb8 seem to be possible alternatives, but Nd4 seems to be the better move). My comment about playing moves too fast was in regard to the previous moves.

why?

Because this recapture loses the pawn after 15.Nd5, 16.g4 and 17.Nxd4; this is what White actually does.

Yes, but not sure exactly why?

The Black bishop is more passive on e8 than on either g5 or f7. Furthermore, it loses time in the attempt to position rooks on semi-open files and to connect rooks.

Can you suggest a better move?

17...Bd7. This is mentioned in the next comment. It will be clear in a while why.

should he retreat back to d4 do you think?

To d8 you mean? Yes, it was by far better (in the least not trading a rook for a knight). 19...Rd7 is perhaps also better than 19...Rd8.