I have always been oddly fascinated by villains. When I was four or five, I was pretty much in love with Scar from The Lion King and often had quite a bit of fun using him to creep out my little sister. And today, I still have that weird infatuation with villains--and I have come to realize a few things that could help you, as a writer, create some evil, awesome villains.
In my experience (which, by the way, is about nine years of novel-writing, about fifteen years of short-story writing [if not more!], and countless years of reading books and watching movies) there is one thing that I believe is the number one key to writing great villains: base them off of YOU.
Now, I know that sounds a little creepy--why on earth would you want to turn yourself into a bad guy?!--but isn't creepiness the point? Aren't villains supposed to be creepy? Answer = Yes.
In order to base your villain off of you, you need to take one of your own fatal flaws (we all have those) and give it to your villain. Then…turn up the volume. Putting yourself into the villain often makes them more terrifying because what makes them evil is something real--something that exists within the writer, the reader, and also within your story's hero. You'll also have a good foundation when writing him--because you know what he is feeling by experience. This will make your villain seem real and believable--and most importantly--terrifyingly unsettling.
In fact, Scar is a great example of this concept. His fatal flaw would be jealousy--something that exists within us all. He grew up as the scrawny runt, living in the shadow of his much stronger brother, Mufasa, and has allowed his jealousy of his brother to turn into bitterness, anger, and hatred--which drives him to the extreme measure of murder. He believes he must prove that he is worthy to be the Lion King and not Mufasa--that he is strong and powerful, too--and even more so.
Scar's jealousy is something that exists within us all on some level (I know some of it exists in me!) and that realization will suddenly make him seem much more unnerving a villain, because we realize some part of us is part of him, and visa versa.
So, if you're willing to open yourself up and examine your own fatal flaws, you'll have a great chance of creating those evil, awesome villains we all love to hate.