AntiGuv, with all due respect, I am not interested in the "problem of evil." I am interested in intelligent design as a scientific theory to be taught in schools.
I would love to discuss the thoughts in your first paragraph, but not in the context of good and evil.
So far as I can tell though, I have answered your basic question: the existence of birth defects can be explained within the rubric of ID by postulating either an incompetent or a malevolent design, preferably both.
ID is not science. You can just make it up as you go along. So, when little Billy asks his teacher: "Since life is intelligently designed, why are there Siamese twins?" then she can answer: "Because the designer is a wicked moron, dear."
Bam! It's reconciled..