I haven't read through everything in this thread, but what I read reveals to me that there's a lack of clarity about several concepts.
1. "Evil"
We tend to categorize acts is good, neutral, bad, and then there's the really bad stuff we label "evil." But this concept is false. It means that we can be OK with a world that has neutral actors, and perhaps a little bit of "bad" actors, but we really don't want a world with "evil" actors.
But the problem is this: How do we define "evil"? Or perhaps more to the point, how do we define "sin" (since "evil" is just and extreme form of "sin")?
We ask "why does God allow Evil?" but the more significant question is this: "Why does God allow sin at all?"
Well, the answer is best found in a more accurate definition of "sin."
Sin is not a list of things you can't do. Sin is actually defined by the person of God Himself, for there is no sin in Him and He is completely good. Consequently, "sin" is any decision that is contrary to the nature of God, the character of God, the will of God, the values of God, or God's design.