Potpourri
Creating Villains
I remember reading Albert Camus's play Caligula in college and then wandering around in a fog for two days worried about what was wrong with me because the logic Caligula used to rationalize his evil actions actually made sense to me. Now THAT'S a great villain.
Villains Must Be Believable
The villain must be so fully fleshed out and believable, and his actions so easy for him to rationalize to himself (and us), that we think to ourselves, "There, but for the grace of God, go I." The villain should be an everyday person who took a wrong turn. Or someone who takes a particular obsession to a new level, who is normal in every other respect, but whose hidden dark aspect would appall anyone who accidentally shone a light on it.
The important thing is that we actually identify with the villain on some level -- otherwise, he becomes a cardboard character whom we can't really fear because we don't know anybody like that. One of my favorite romances is Mary Jo Putney's Silk and Shadows, which has a wonderfully evil villain. Yet his soft spot is his little daughter, for whom he would do anything and whom he treats like a princess. That's what makes him so tragic--we can see the potential that might have been if he hadn't allowed his greed and lack of caring for everyone else to twist him into the monster he has become.
In my current book, Dance of Seduction, the villain is motivated by a need for power and control, but despite all that he feels a normal love for one of the secondary characters, which motivates him to destroy anybody around her who might keep them apart.
Developing Villains
Developing villains requires the same process as developing other characters. The writer has to ask himself why the villain is behaving this way. It can't just be because he's a villain. He might take something that a "normal person" (if there is such a thing) would slough off or bury in his past and make it the center of his identity.
He might be a control freak who is perfectly normal as long as he's always in control, but when someone jerks all control from him, he snaps. I truly believe that monsters are made, not born, so it helps that I enjoy watching forensic shows and crime shows where specialists examine the psychological background of villains. I try to use some of what I learn from them when I create a villain.