Ma’amar Haumnam Perek 6 Class 7, Perek 7 Class 1. Two Midrashim that argue creation יש מיש as a part of Torah, which is less (and lower) than יש מאין. The רמב”ם in his מורה נבוכים חלק ב’ פרק כ”ו has issues with this, but the Rebbe explains it here and says (in effect) that this allows for there to be a world (in spite of Achdus [but see later beginning with class 128]) to be (and allow for our Free will etc.) where we can serve Him.
