Can an "evil" person be mentally sound?

Whenever there is a high profile case, like the Aurora shooting, I find myself frustrated by the discussion of the criminal’s mental state. Is he crazy or is he evil? I have a hard time distinguishing between the two (not to suggest that I believe all mental illness makes people do bad things), but is it possible for someone in the right frame of mind, or someone with a healthy psyche, to blow up buildings or shoot up a schoolhouse full of children?
The atrocities committed by these high profile murderers often leads to discussions about how evil and demented these people must be, because their crimes are so heinous and appear to be absent of empathy – but is that not because something has misfired in the brain?

People who suffer from severe mental illness are three times more likely to end up in prison than in a hospital, and the most recent statistics that I could quickly grab say that at least half of the people in US prisons suffer from mental health problems (higher for women, at 73%.)

Often we jump to describe these actions as “sick” or even so far as to describe the killer as “sick,” but we do not treat them as if they are sick. The masses gather up their imaginary torches and pitchforks and rally to fry ‘em, which is an emotional response that I can understand – but is it right?

Is the legal definition of insanity sufficient?

Is having a grasp that what you’re doing is wrong as cut and dry as it needs to be?

Is “evil” in the “soul” or in the brain?