Well congratulations Machjo, you've obviously asked a provocative and subtle question here, with deep philosophical and religious complications. It's easy to give a short answer, yes or no, and offer a relatively simplistic justification for it, but frankly I don't think anything less than a book-length treatise will really do it justice. And we're not going to get that on a message board. We've seen both yes and no answers here, varying degrees of moral relativism, invocations of Higher Authority as the arbiter of morals, and everything in between.
I tend to the view that the answer is yes, evil does exist, in the sense that there are people who do evil things, but I'd also generally agree with those who view good and evil as social constructs that are defined relative to an action's impact on the people making the definitions. For instance, I'm quite sure the Mongol hordes who over-ran much of eastern Europe in, what was it, the 13th century? didn't consider themselves to be evil, but the people who were subjected to their pillaging, murder, and burning certainly did. There are people today who consider the United States to be evil, and a former U.S. President once labelled the Soviet Union as the Evil Empire, quite seriously. He wasn't just playing at politics, he really believed that. The current U.S. President defined an Axis of Evil a few years ago, though again, I doubt that the nations he identified would agree.
It's quite clear, I think, that evil is often defined in relative terms, but part of the burden of the original question, at least implicitly, is this supplementary question: is there anything that is absolutely evil, anything that all societies, all people, at all times, under all circumstances, would define as evil? I think the answer to that one is probably no. The partial record of 20th century holocausts I posted in my first response to the question suggests, at least to me, that slaughtering large numbers of members of groups you don't happen to like, for whatever reason, is so common that we could legitimately call it normal human behaviour. Even the Jews, one of the most persecuted and reviled people over millennia of history, the one time they were in a position to inflict such harm on their perceived enemies, did it too. I find that notion, that it might be normal human behaviour, deeply distressing, but that's simply a reflection of my own values.
Ah, it's late, I'm rambling, I need to go to bed. But just to bring this full circle by referring back to my first paragraph, there are some good book-length explorations of this question, and in particular I recommend Michael Shermer's The Science of Good and Evil, ISBN 0-8050-7520-8