For instance someone has 'evil' thoughts. Then the question goes...why is the thought evil. It cannot hurt someone or anything, it is just a thought. The thought might lead to an 'evil' action. What in of itself makes the thought evil.
There is where i see you argument coming from.
In the 'spiritual school' of ethics (I'm sure there is a more learned and appropriate term for this, but I don't know it), the concept that is shared among them isn't that ideas have an independent existance as Platonic forms (though many of course would argue that they do), but rather that for something to be judged good it is not sufficient to say that it does no harm to someone else, but also that it does no harm to the person himself. That is to say, the 'spiritual school' believes that to be good, you must keep your internal emotional and mental life ('spirit') pure and free from things that are destructive and that this may be as important or even more important than simply refraining from doing harm or evil.
For example, the Stoics were materialists and unlikely to believe in evil as a 'spirit' per se, but they reasoned that negative emotions like anger, jealousy, lust and so forth arose from serious errors in reasoning within the thinker and that in turn, they propagated errors in judgment that would of necessity lead to incorrect action. Therefore, the wise sage cultivated correct reasoning which would ultimately lead to calmness, tranquility, and the ability to resist all pain and suffering.
While there are differences, similar beliefs are shared by Buddhism. The Buddhists believe that before an action can be truly classified as good, it most procede from the eight fold path which begins with right understanding, then right thinking, then right intention, then right speach, and finally right action (and then so forth as your actions propagate through the world). Unless you follow the noble eightfold path it is highly unlikely that you would act rightly, and even if your action did incidently appear as a right action, the fact that it proceeded from wrong understanding and wrong intention invalidates it as something 'good' and it would not retain a noble character for long (you would lack rightmindfulness and right concentration).
So the answer to your question 'What makes the thought evil?', is in many cases that it harms the thinker and that harm to the thinker is an evil in and of itself, both because the thinker is then more likely to engage in wrong action proceeding from the thought and because since the thinker is my brother harm to my brother is indirect harm to me in as much as I love my brother and would not wish to see him come to harm.
It is not necessary to imagine that evil thoughts have an independent essense other than their destructiveness, and I'll withhold my own views on whether or not they do as not relevant to the discussion.
In D&D, as you say, evil clearly has independent and separate existance, allowing through some mechanism for an object to be evil. Any cosmology you invent for D&D needs to explain this attribute, and most possible explaination I think tend to suggest that in D&D a thought could be evil even if you don't believe that thoughts being evil is an attribute of the real world.
One of the things I enjoy about fantasy games is playing with possible cosmologies that don't necessarily agree with my view of the real world (D&D's default cosmology fails this in all sorts of ways some obvious and some less obvious), however I sympathize with people who want to align D&D's cosmology exactly with how they believe the real world behaves.
What I find particularly interesting about the latter though is that its often possible to compare a person's assumption about 'the way the world really is' to a hypothetical world view within the default cosmology and apply a label to it. For example, the claim that neither good nor evil really exists, or that they are relative or created things, or that they are really the same thing, implies a 'neutral' worldview with respect to 'good/evil', as those are possible ways that a 'neutral' character could view the world and thereby justify their particular actions.
What I find if more interesting about the D&D cosmology is it can thense become a playground where in we explore questions like, 'What is the result of looking at the world in various ways?' or entertain questions like, 'Given the D&D cosmology, is it possible that within the created world that the believers in X are actually correct?' In my own campaign, I try to take this question beyond the level of just 'Are the Lawful Evil beings right?', and into questions like, 'Given this cosmology, whats the right relationship between mortals and the gods?', or 'Given this cosmology, is 'Order' or 'Good' or 'Evill' really relative or does the cosmology sufficiently justify the existence of the thing?', or 'Given this cosmology, is it just to kill goblin children in cold blood?'
Note the frequent application of 'Given this cosmology...', because one of the most interesting aspects of this mental game is the question of whether some things hold true universally or whether some things are merely artifacts of 'the way this world is' (however you believe that to be).