Thanks!
I wouldn't worry about which story the firm will like/is more suitable. Choose a story you find interesting. It doesn't have to be PE or related to the firm either.
I don't have a set structure for this question provided you cover all the points they raised. The most obvious one would be 1. What is X and Why X interests you 2. Opportunities of X to law firms. 3. Challenges of X to law firms. However, there's no need to be rigid as long as you cover all the above points.
The best answers I review are where applicants have had the confidence to lead with their opinion from the start. They're a lot more evaluative than descriptive (although a short description to introduce the story is completely fine). It's also very clear that the story interests them and I can sense their interest/passion from the way they write about the topic.