Some questions very difficult for every DM.
What to do when a player want to create and role an evil character?
I'd allow him as the Rule of the Good DM:
Have very few prohibitions in the game.
We've already seen in previous posts, that to have an evil alignment doesn't mean to be crazy or mad or brutal and that evil characters can have, and usually have, normal social interactions.
Keep in mind that alignment is a bunch of ideals and virtues that are deeply inside soul and mind and that cannot easily been explained.
Think about yourself and say 3 virtues in which you truly believe: you'll find how much it's difficult.
Is it possible to have a group made all (or most them) of evil characters?
Yes, it is and you would probably be satisfied.
I remember with pleasure two campaigns (both online) where PCs were evil.
In the first one (I was a player) we were Drow of a Minor House exiled from Menzoberranzan. We had to survive in the Underdark and we were under the strict code of conduct of the Drow.
Cohoperation was fundamental as well as were unavoidable internal feuds to gain power inside the group clinging toward the head of the chain of command.
In the second one (I was the DM) PCs were Zhentarim who were ordered to infiltrate into Zhentil Keep while the city was besieged by an army of giants and humanoids. Even there groupmembers both needed to cohoperate and were under the brutal Zhentarim discipline code and they silently struggle between themselves to gain more power and more personal wealth.
We must remember that the real core of D&D game is made by a group of guys who must face some hardiness and so they have to work together, a little at worst. If not the group will be torn apart and they're going to die.
So with right motivations, you can run a group of evil PCs.
Hold on a minute!!
Think about "right motivations" and try to answer to this question
Whose are those motivations?
Of characters many reply.
The right one is: of players.
Always remember the following Rule of the Good Dungeon Master:
Players' motivations are different and much more important than characters'.
Therefore when a player will tell you he wants to play an evil character try to know his motivations not his character's.
Why do a player want to play an evil character?
To know the right answer to this question will let you better handle the player and the whole group.
There's only a kind of player really "dangerous" when playing an evil character: the one who believes he can act freely, being above everyone and everything, having fun stealing wealth or magic to other players, killing them or doing senseless things hiding behind the great excusation "Hey...it's not me...I'm Chaotic Evil!!!".
Those disruptive players have only one real goal: to prove themselves they're more brilliant than others by destroying the group on purpose.
This behaviour is the same of internet trolls'.
You can easily handle them by following the same strategy to take against internet trolls:
Don't feed the troll.
Make happen consequences of his crazy actions only against him and never against other characters, even if it would be clear you're doing it on purpose.
You can do it, you're the DM.
He'll leave the group or he'll change his mind.