Long conditionals in ifs
Readability is extremely important, particularly in large projects with many programmers involved with the same code. What you do, using local Boolean variables to clarify potentially complex conditions, is a very good way of improving readability that I try to imprint on my co-workers.

That said, in your example, if I wrote that method from scratch, I would do it similarly to your first re-write. However, if I just happened upon the existing code, I would do just about exactly as your second re-write. It is good enough, and I do not really like to change other peoples code unless it is either incorrect, or directly violates the coding standard (which it incidentally does two-fold: The conditional line is too long, and our standard also tells us to place sub-conditions on separate lines).

So, in my humble opinion: You have it right - I like how you do it, and you should take pride in writing readable code. But do not waste time on re-writing working code when a simple re-formatting is good enough.