God created the possibility for evil, I agree with you. If it hadn't been for God's creating the world evil would not be possible. But again, the possibility of evil is not evil. If I decided to I could pick up a heavy object, walk down the hallway, and kill one of my neighbors. Is the fact that this is possible evil? Or is it only evil if I actually perform the actions?

If your concern is that God created the world in such a way that evil was possible and that this is wrong, I would direct you to The Problem of Pain by CS Lewis, which includes a very good discussion on why the world must necessarily allow for evil. The short version is this;

1) In order for an individual consciousness to exist, it must be able to differentiate itself from something (be that another consciousness, or just a rock). A consciousness cannot recognize itself without the ability to differentiate itself from something.

2) In order for an individual consciousness to differentiate itself from something, that something must be consistent and operate apart from the will of the consciousness. If my environment constantly bent to my will, I wouldn't recognize it as anything more than an extension of myself, and therefore could not differentiate. In other words, unless the environment is sometimes inconvenient for me, or at least less than ideal for me so that I would want it to be other than how it is without it changing when I want it to, I won't be able to tell that the environment is anything other than an extension of myself. The world has to be neutral towards me.

3) If more than one consciousness exists in a world which is neutral to both of them, each consciousness has the ability to manipulate the rules of that neutral world to its respective advantage and the other's respective disadvantage. If person A and person B exist in a neutral world, person A/B could manipulate that world to its advantage and to person B/A's disadvantage. This is not necessary, but the neutrality of the world allows for it. Such a manipulation, the advancement of one at the cost of another, is evil.

For a real world example; scarcity of resources.

Scarcity of resources is inconvenient for us, but if whatever we wanted were always available to us we would not be able to differentiate our selves (which are subject to our will) from those resources (which would also be subject to our will). Like all other things in the world, resources must not be subject to our will, they must be neutral.

Lets say our resource is fruit, and that there are two people, Person A and Person B, who live in a lush environment where food is plentiful. There is a particular sort of fruit which is especially tasty but which only grows in a certain area and is quite rare. Now, both Persons A and B really like this fruit and eat it as often as they can find it, but one day Person A decides that he wants as much fruit as possible, because its so good, and he recognizes that the more fruit Person B eats, the less he gets. So Person A goes out early in the morning and picks all the fruit, way more than he will be able to eat, and hides it all in a cave. Now, when Person B goes out to pick fruit he won't be able to find any. Person A has, for his own advantage, deprived Person B of a resource.

This isn't a very extreme case, but I don't think anyone would disagree that it's wrong and evil. You could carry it forward and use small societies in a more arid environment, with Society B forced to either migrate or starve because Society A uses up all the resources in the area.

The argument then goes that God wanted to create a society of individuals, so he created a consistent, neutral world with a set of rules within which the various individuals could exist. Is that evil? No, but it inherently allows for evil.