[NOTE: The implications of what is expressed below are vast. It is a central concept in an entire position of hashqafah. As such, it will beg more questions than it answers. However, it is simply not possible in the space of an answer here to express it all adequately - to do so could fill volumes. So, please relate to following as a piece of a much larger whole.]
It is important, first of all, to understand that when the word ra^ is used in Hebrew, it is not always indicative of malicious or wicked "evil", rather it is used as a general term for all levels of negativity (e.g. "bad", "evil", "wrong", "trouble", et al). I make this qualification only to prevent the common misconception that if God is the "Creator" of evil, that this necessarily implies that He is the author of cruelty, barbarism, and travesty committed by human being throughout the course of history (has wa-shalom). This, of course, is completely absurd, as it is a foundational principle on which the entire Torah rests that man is endowed with an absolutely free will, without Divine coercion of any kind (cf. Hilkhoth Teshuvah 5:5). As Rebbi ^Aqivah said, "ha-kol ssafuy wa-reshuth netunah - Everything is foreseen and [yet] free will has been given" (cf. Pirqey Avoth 3:18). God is neither responsible nor the source of human choices, good or bad.
Thus, in order to not attribute neither outright evil and wickedness (has wa-shalom) nor absurdity to the Creator of All, blessed be He, we must seek an explanation for the seemingly explicit statement made by Yeshayahu HaNavi (45:7) that God is the creator of "evil" that accords with both Hazal and the Tanakh.
In the Moreh Nevukhim, the Rambam addresses both the origin(s) of evil and the meaning behind the pasuq in Yeshayahu 45:7.
In III:10, the Rambam explains that the meaning of Yeshayahu 45:7 [yosser or uvore' hoshekh ^oseh shalom uvore' ra^ ani Adhonoy ^oseh khol eleh - "Forms light and creates darkness, makes peace and creates evil. I, HaShem, do all these things."] is that evil - expressed in connection with the word bore'-"creates" - is not a positive existence, but is merely the absence of properties. Therefore, it can only be "created" indirectly, like when someone directly extinguishes a lamp and indirectly "produces" darkness - the absence of the attribute of light. In the pasuq, light and darkness are used as a comparative metaphor for good and evil, and should probably not be understood as a reference to the original act of creation.
In other words, we can attribute evil to the Creator only in the way that He created a world in which evil could potentially exist and He fashioned mankind with the capacity to commit wrong. However, the reality of evil is that it exists in the negative choices of human beings that fill the "void" of free will.
In conclusion, I would like to share a personal story.
I once had a discussion with an older [secular] Jewish psychologist about the classic accusation of God: "Where is He when children suffer?" Now, any demographic could be inserted to replace "children" in that question. After all, suffering is suffering. However, the suffering of innocent children cuts directly to the point. This doctor asserted that if God were a truly loving God, then He wouldn't have caused it or allowed it to happen.
My answer to him was another question. Actually, it was a series of questions: "Where are we? Where is mankind when children suffer? Where are we when we make wars for money? Where are we when we encourage free sexuality and immorality, causing thousands of unwanted children to be born to mothers who will not properly care for them? Where are we when we use chemicals, plastics, radiation, and food additives to feed our people? Where are we when we feed people GMO produce that stock animals refuse to eat when given a choice in trials? Where are we when we pump pollution into the water and air? Is God to blame for all the nonsense that mankind is collectively responsible for when we know better?" He was silent and then admitted that these were very good questions that he had never thought about before.
As the Rambam explains in volume III of the Moreh Nevukhim, the majority of the evil in the world is man to man and man to himself. Very little comes from above.
And if anyone is tempted to take issue with this understanding of Divine Providence, then I ask them to ask the difficult questions raised by the opposite view: When a frum Beis Yaakov girl is raped while walking home, did God pre-ordain her to be raped and the rapist to commit his disgusting act? Does God starve children? Does God cause men and women to commit adultery through His Divine Will? The answer to all of these questions is an unequivocal "NO". And if anyone persists in their position that such things are directly caused by God, then I would propose that such a person has never truly been a victim that has had to ask those questions.
HaShem created a good world, He created man with free will, knowledge, and the ability to live on earth in peace. He expects us to do our job. And we will, bi-siyata di-shmaya.
Hope that this helps. Kol tuv.